Oil rises on prospects of wider Middle East war, firmer global supply caps gains
Shafaq News/ Oil prices rose onThursday as the prospect of a widening Middle East conflict that could disruptcrude oil flows from the key exporting region overshadowed a stronger globalsupply outlook.
Brent crude futures gained 80 cents,or 1.08%, to $74.7 a barrel as of 0405 GMT. U.S. West Texas Intermediate crudefutures gained 85 cents, or 1.21%, to $70.95.
"Following the initial jittersfrom geopolitical risks in the Middle East, we have seen some calm return toglobal markets, but of course, with market participants still keeping aside-eye on any upcoming Israeli response," said Yeap Jun Rong, a marketstrategist at IG.
"The question for oil now iswhether Iran's energy infrastructure will be in Israel's crosshairs," saidYeap.
Israel bombed central Beirut in theearly hours of Thursday, killing at least six people, after its forces sufferedtheir deadliest day on the Lebanese front in a year of clashes againstIran-backed armed group Hezbollah.
The strike comes a day after Iranfired more than 180 ballistic missiles at Israel in an escalation ofhostilities, which have seeped out of Israel and occupied Palestinianterritories into Lebanon and Syria.
"From here, it's a waiting gameto see what the Israeli response will be and I suspect that comes after theconclusion of the Rosh Hashanah holiday tomorrow," said IG market analystTony Sycamore.
"I doubt that Israel willtarget Iranian oil infrastructure, as such a move would likely drive oil pricestowards $80, which would be frowned upon by Israel's allies, who are makingstrides against inflation," Sycamore said.
Meanwhile, U.S. crude inventoriesrose by 3.9 million barrels to 417 million barrels in the week ended on Sept.27, the Energy Information Administration said, compared with expectations in aReuters poll for a 1.3 million-barrel draw.
"Swelling U.S. inventoriesadded evidence that the market is well supplied and can withstand anydisruptions," ANZ analysts said in a note.
Some investors remained unfazed asglobal crude supplies have yet to be disrupted by unrest in the key producingregion, and spare OPEC capacity tempered worries.
"After Iran's attack, pricesmay stay elevated or remain more volatile for a little longer, but there'senough production, there's enough supply in the world," chief executiveofficer of East Daley Analytics, Jim Simpson, told Reuters.
OPEC has enough spare oil capacityto compensate for a full loss of Iranian supply if Israel knocks out thatcountry's facilities.
However, traders worry the producergroup would struggle if Iran retaliates by hitting installations of its Gulfneighbours.
"The effectively availablespare capacity might be much lower if renewed attacks on energy infrastructureon countries in the region happen," said Giovanni Staunovo, a UBS analyst.
(Reuters)
