LONDON: Global oil benchmark Brent reached $93 a barrel on Wednesday as the risk of an escalating conflict in the Middle East threatened to disrupt oil supplies from the region, with Iran calling for an oil embargo on Israel.
Brent crude futures rose $1.33, or about 1.5%, to $91.23 a barrel at 1231 GMT. West Texas Intermediate Crude (WTI) futures rose $1.28, or about 1.5%, to $87.94 per barrel.
Both benchmarks rose more than $3, reaching their highest levels from two weeks earlier in the session.
Markets priced risk premia after hundreds of Palestinians were killed Tuesday in an explosion at a Gaza City hospital that Israeli and Palestinian officials blamed on each other.
Jordan subsequently canceled a summit with US President Joe Biden and Egyptian and Palestinian leaders. Biden arrived in Israel on Wednesday pledging solidarity in the war against Hamas, backing his narrative that the Gaza hospital explosion was caused by militants.
“This turnaround in diplomatic fortunes is once again raising fears about the spread of conflict and thus the oil sector leapfrog,” said John Evans of oil broker PVM.
Elsewhere in the Saudi city of Jeddah, Iranian Foreign Minister Hossein Amirabdollahian urged members of the Organization of Islamic Cooperation to impose an oil embargo on Israel.
OPEC+ does not plan to take immediate action on Iran’s call, two sources from the producer group told Reuters.
“A long occupation looms as the scenario that pushes Brent oil futures above $100/bbl as it increases the risk of Israel’s Hamas conflict spreading and potentially directly drawing in Iran,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia.
Apart from the geopolitical tensions, other factors also support the situation oil prices.
U.S. crude inventories fell by a much steeper-than-expected 4.4 million barrels in the week ended Oct. 13, compared with forecasts for a decline of 300,000 barrels, according to market sources citing figures from the American Petroleum Institute on Tuesday. [API/S]
Official data from the US government will be released later on Wednesday.
On the demand side, China’s economy grew faster than expected in the third quarter, official figures showed on Wednesday. These indicate that a recent wave of policy measures is helping to support a cautious recovery.
Data also showed that oil refinery throughput reached a record daily rate in September, up 12% from a year earlier, as refiners increased production rates to meet strong demand for transportation fuel during Golden Week and to improve production activity.
But analysts were cautious about China’s economy, with the country’s real estate sector still in peril.
“The economic recovery is still in its infancy,” said Moody’s Analytics economist Harry Murphy Cruise.
Meanwhile, higher-than-expected US retail sales boosted expectations of another rate hike by the end of the year. Raising interest rates to curb inflation could slow economic growth and reduce demand for oil.
Brent crude futures rose $1.33, or about 1.5%, to $91.23 a barrel at 1231 GMT. West Texas Intermediate Crude (WTI) futures rose $1.28, or about 1.5%, to $87.94 per barrel.
Both benchmarks rose more than $3, reaching their highest levels from two weeks earlier in the session.
Markets priced risk premia after hundreds of Palestinians were killed Tuesday in an explosion at a Gaza City hospital that Israeli and Palestinian officials blamed on each other.
Jordan subsequently canceled a summit with US President Joe Biden and Egyptian and Palestinian leaders. Biden arrived in Israel on Wednesday pledging solidarity in the war against Hamas, backing his narrative that the Gaza hospital explosion was caused by militants.
“This turnaround in diplomatic fortunes is once again raising fears about the spread of conflict and thus the oil sector leapfrog,” said John Evans of oil broker PVM.
Elsewhere in the Saudi city of Jeddah, Iranian Foreign Minister Hossein Amirabdollahian urged members of the Organization of Islamic Cooperation to impose an oil embargo on Israel.
OPEC+ does not plan to take immediate action on Iran’s call, two sources from the producer group told Reuters.
“A long occupation looms as the scenario that pushes Brent oil futures above $100/bbl as it increases the risk of Israel’s Hamas conflict spreading and potentially directly drawing in Iran,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia.
Apart from the geopolitical tensions, other factors also support the situation oil prices.
U.S. crude inventories fell by a much steeper-than-expected 4.4 million barrels in the week ended Oct. 13, compared with forecasts for a decline of 300,000 barrels, according to market sources citing figures from the American Petroleum Institute on Tuesday. [API/S]
Official data from the US government will be released later on Wednesday.
On the demand side, China’s economy grew faster than expected in the third quarter, official figures showed on Wednesday. These indicate that a recent wave of policy measures is helping to support a cautious recovery.
Data also showed that oil refinery throughput reached a record daily rate in September, up 12% from a year earlier, as refiners increased production rates to meet strong demand for transportation fuel during Golden Week and to improve production activity.
But analysts were cautious about China’s economy, with the country’s real estate sector still in peril.
“The economic recovery is still in its infancy,” said Moody’s Analytics economist Harry Murphy Cruise.
Meanwhile, higher-than-expected US retail sales boosted expectations of another rate hike by the end of the year. Raising interest rates to curb inflation could slow economic growth and reduce demand for oil.
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