Rising oil prices amid Middle East tensions touch five-month high
9 April 2024 15:06
Oil prices on the New York fuel exchange are rising and are now close to a five-month high. Brokers indicate that the upward trend is due to investors assessing increasing tensions in the Middle East and ongoing supply problems.
On Tuesday (April 9), a barrel of West Texas Intermediate for May delivery rose by 0.13% to roughly £67. The price of Brent for June increased by 0.18% to approximately £70. This was a reaction to Monday's price drop, when the commodity lost almost 1%, marking its first decline in five sessions
As brokers explain, the recent price increases are the increasingly tense situation in the Middle East. This specifically refers to the war in the Gaza Strip, which has been ongoing since Hamas' terrorist attack on Israel in October 2023. This is the bloodiest episode of the conflict between Israelis and Palestinians that has been going on for over 70 years.
"There is a risk that the conflict will spill over into a wider area of this flashpoint on the world map, leading to a disruption or reduction in supply. The Middle East accounts for as much as one-third of the world's oil supplies"
The market is pricing in increased geopolitical risk
Israeli Prime Minister Benjamin Netanyahu stated two days ago, in GMT, that Tel Aviv will not agree to a ceasefire until all approximately 120 hostages held by Hamas are released.
The head of the far-right government announced that despite growing international pressure - including from the United States - Israel will not yield to "extreme" demands from Hamas.
Oil markets, according to brokers, are also preparing for Iran's response in connection with suspicions of an Israeli attack on the Iranian consulate in Syria last week, especially since the Lebanese Hezbollah warned that it is ready for war.
"Global markets are already pricing chunky geopolitical risks" - write analysts at Goldman Sachs Group Inc. in a market note.
