Oil prices rise as US inventory drops and war concerns in the Middle East escalate
Shafaq News/ Oil prices climbed onWednesday after an industry report showed US crude and gasoline inventoriesfell and as the market watched for a possible widening of the Israel-Gaza war,which may impact global oil supplies.
Brent crude futures rose 56 cents,or 0.7%, to $81.25 a barrel by 0540 GMT. US West Texas Intermediate crudeincreased by 59 cents, or 0.8%, to $78.94 per barrel.
Key Middle Eastern oil producer Iranhas not yet retaliated against the assassination of a Hamas official in itscapital that it blames on Israel. But any escalation of the conflict in theMiddle East is a clear upside risk to oil prices over the next six months andpotentially even longer, said Vivek Dhar, analyst at Commonwealth Bank ofAustralia.
"The extent of Iran's reprisal,as well as Israel's response, will likely determine whether the currentconflict in the Middle East broadens into a regional conflict," said Dhar.
"The immediate market concernwill be attacks on Iran's oil supply and infrastructure. Iran accounts for 3-4%of global oil demand, of which, 25-50% is exported."
Iran has vowed a severe response tothe killing of the Hamas leader late last month. Israel has neither confirmednor denied its involvement but it is fighting in Gaza against Hamas after thegroup attacked Israel in October. To counter Iran, the US Navy has deployedwarships and a submarine to the Middle East.
"If a broader conflict in theMiddle East develops, this would likely threaten not only Iranian supply butalso oil moving through key choke points in the Middle East," saidanalysts at ANZ Research in a note on Wednesday.
"This could expose over 20million barrels per day of oil to risks of disruption."
US crude oil and gasolineinventories fell last week, while distillate stocks rose, according to marketsources, citing American Petroleum Institute data on Tuesday.
The API figures showed crude stocksdeclined by 5.21 million barrels in the week ended Aug. 9, the sources said,speaking on condition of anonymity. Gasoline inventories eased by 3.69 millionbarrels, and distillates rose by 612,000 barrels.
Falling inventories could indicatehigher demand in the US, the world's biggest oil consumer.
Official government data from theEnergy Information Administration is due later on Wednesday.
Capping oil price gains however, theInternational Energy Agency (IEA), kept its 2024 global oil demand growthforecast unchanged on Tuesday but trimmed its 2025 estimate, citing the impactof a weakened Chinese economy on consumption.
(Reuters)
