Oil climbs by 5% following escalation in Middle East conflicts

Oil prices climbed by 5% on Thursday as tensions in the Middle East heightened, raising concerns about possible supply disruptions. On Thursday, Joe Biden stated that the U.S. is in talks with Israel about the potential for Israeli strikes on Iran’s oil facilities. Brent crude futures increased by $3.72 to settle at $77.62/barrel, while WTI crude futures rose by $3.61 to $73.71/barrel. Both benchmarks reached one-month highs.

According to analysts at Citi Group, if Israel were to launch a major strike on Iran’s export capabilities, it could result in a loss of 1.5 million barrels/day from the oil market. Oil prices have surged by 8% this week, the most since early 2023, amid fears of Middle East supply disruptions. Iran recently launched missiles at Israel, escalating tensions following Israeli military actions against Hezbollah in Lebanon.

In Libya, the National Oil Corporation (NOC) announced the lifting of force majeure at all oilfields and terminals on Thursday, potentially ending a crisis that had curtailed oil production.

Global benchmarks traded slightly higher during Friday’s intra-day sessions as the markets reflected on the possibility that escalating tensions in the Middle East could impact crude supply. Brent crude was up by 68 cents, trading at $78.30/barrel, while WTI NYMEX was 63 cents higher at $74.34/barrel at the time of writing.