Oil Prices Rise Amid Middle East Tensions

Oil prices saw an increase on Thursday, driven by fears that the escalating conflict in the Middle East may disrupt crude supplies from this vital exporting region.

By 08:40 ET (12:40 GMT), U.S. crude futures were up 2.2% at $71.61 per barrel, while Brent crude rose 1.9% to $75.33 per barrel.

Crude Rises on Middle East Tensions

Crude benchmarks are climbing as traders await Israel’s response to Iran’s firing of over 180 missiles into its territory, particularly concerning how this might affect Iranian oil infrastructure and supply from a key OPEC member.

Analysts at ING noted, “There have been suggestions that Israel could target Iranian oil facilities, which would significantly impact oil prices depending on the attack’s scale.” They also highlighted that Iran exports about 1.7 million barrels per day (b/d) of crude oil.

The potential for escalation is significant, especially as a more limited response could focus on missile launch sites, while a major escalation could involve targeting Iranian nuclear facilities.

OPEC+ Keeps Output Unchanged

OPEC+ members met on Wednesday and decided to keep their output policy unchanged, with plans to increase production by 180,000 b/d starting in December. An OPEC+ source mentioned that the discussions reflected a hope for non-escalation in light of the geopolitical climate.

Although OPEC possesses enough spare capacity to offset some Iranian supply losses, much of that capacity is vulnerable due to rising tensions in the Gulf region, according to UBS analyst Giovanni Staunovo.

US Crude Inventories Rise – EIA

The Energy Information Administration reported that U.S. crude inventories rose by 3.9 million barrels to a total of 417 million barrels for the week ending September 27, contrasting with expectations of a decrease of 1.3 million barrels.