Oil rates rise amid intensifying tensions in Middle East
Date
10/21/2024 2:34:36 AM
(MENAFN) On Monday, oil rates experienced an uptick amid reports that Israel is poised to launch a significant attack on Iran in retaliation for Tehran's missile strike on October 1. This geopolitical tension has resulted in increased market anxiety, which typically drives oil prices higher. The international benchmark for oil, Brent crude, rose by 0.4 percent, reaching USD73.13 per barrel as of 09:56 am local time (06:56 GMT), up from the previous close of USD72.87. Similarly, the US benchmark, West Texas Intermediate (WTI), climbed 0.5 percent to USD69.09 per barrel, compared to USD68.78 at the end of the previous session.
The ongoing hostilities between Israel and Iran have contributed significantly to rising oil prices, reflecting the concerns of traders regarding potential supply disruptions. According to Israeli state television KAN, an anonymous official indicated that Prime Minister Benjamin Netanyahu and Defense Minister Yoav Gallant are set to convene a Security Cabinet meeting to determine the timing and strategy of the impending military action. Compounding these tensions, US President Joe Biden disclosed on Friday that he is aware of the specifics concerning Israel's plans for retaliation against Iran, as Tehran has warned it will respond "decisively" to any attack.
The backdrop of escalating tensions has been further exacerbated by leaked classified documents detailing Israel's retaliatory plans against Iran, which have heightened supply concerns among market participants. In addition to these geopolitical factors, the latest monthly report from the Organization of Petroleum Exporting Countries (OPEC) highlighted that Iran had increased its oil production by 21,000 barrels per day, bringing its total output to 3.31 million barrels—this was the largest increase among OPEC members in September. The potential for an Israeli strike on Iran is likely to sustain the upward momentum in oil prices as the market grapples with the implications of these developments.
On the other hand, there are signs that the contraction in China’s real estate sector may be easing, which is a positive indicator for oil demand, given that China is the world’s largest oil importer. In response to the economic downturn, China has announced a 25-basis point reduction in loan interest rates for both 1- and 5-year terms, which serves as a benchmark for corporate and real estate loans. This decision is aimed at revitalizing the credit and real estate markets while alleviating financial pressures on consumers and businesses. Analysts believe this move could foster optimism regarding future economic stimulus measures in China, potentially bolstering recovery in oil demand.
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