Crude oil prices rose significantly during the beginning of the week, after oil achieved weekly profits for the first time in four weeks, which were estimated at about 3%. This rise in prices came against the backdrop of escalating tensions in the Middle East, which contributed to boosting demand for crude oil, and increasing expectations of a decline in oil supplies in global markets in the coming period. The Middle East, a vital hub for oil cargo traffic, is experiencing times of increasing turmoil. According to JPMorgan, this region controls about 20% of global oil shipments, making any escalation in the conflict have severe effects on oil markets. Recent tensions, which have intensified dramatically, have raised concerns about the possibility of supply disruptions, leading to higher prices. The Middle East arena has witnessed rapid developments during the recent period. These developments have resulted in an escalation of conflict in the region, threatening to disrupt negotiations on a peace agreement and an end to the conflict in Gaza. In addition, the IDF reportedly expects the Republic of Iran to retaliate for the assassination of Ismail Haniyeh, head of Hamas’ political bureau, on Iran territory. Such an escalation could widen the scope of the conflict, and lead toto the outbreak of a large-scale regional war. Many heads of state have expressed concern that this escalation could be a prelude to a broader regional conflict, which could have negative effects globally. These concerns go beyond their direct effects on oil supplies across the region, as they could lead to greater economic consequences affecting the overall global economy. Under these tense conditions, oil prices have risen significantly. Spot Brent crude prices rose 0.46% to $79.62 a barrel
Oil price gains amid anticipation of Iranian response
Oil prices steadied after posting their first weekly gains since early July, as the market awaited Iran’s reaction to the assassination of the Hamas leader in Tehran last month. Brent crude prices are currently trading below $80 a barrel, after rising about 4% over the past week, while the price of West Texas Intermediate crude approached $77 per barrel. This stability comes at a time when Tehran confirms its intention to punish Israel for the killing of political leader Hama Iranian state media reported that an Iranian army missile unit is conducting exercises near the Iraqi border, adding further tensions to the regional situation. Commenting on the current situation, Vivek Dar, an analyst at the Commonwealth Bank of Australia, said that “the concern in the market will focus on potential attacks on Iranian oil supplies and infrastructure,” as Iran accounts for about 4 percent of global oil production. “We see Brent crude futures trading between $75 and $85 per barrel in the near term,” Dar said, although bullish risks remain due to ongoing tensions in the Middle East13>.Crude oil prices were also affected by the recovery in stock markets after falling to seven-month lows at the start of last week. This decline was related to the gloomy outlook from China, the largest oil importer, which in turn weighed on traders’ expectations. In light of these dynamics, traders will look to upcoming market reports for more clarity on the balance of supply and demand, with the release of OPEC’s monthly report on Monday, the International Energy Agency’s report today, as well as US inflation data. Wednesday. In the physical market, the data suggests warning signals, as money managers cut their net bullish positions on Brent crude to the lowest level since 2011
Oil price outlook amid these tensions
The outlook for oil prices is complicated by the current tensions in the Middle East, where geopolitical events are markedly impacting the global oil market. As regional tensions escalate, concerns about oil supply stability are growing, directly impacting prices. Under these conditions, it is difficult to accurately predict the future of prices, but there are several key factors that can affect market direction. One of the most prominent factors is the geopolitical situation in the Middle East, where tensions between regional powers pose a potential threat to oil supplies. Disputes and conflicts in this region, which is a major hub for global oil shipments, could lead to disruptions in production and transportation. This turmoil could push prices up sharply as a result of fears of supply shortages. For example, any further escalation in the conflict or any threat to close the Strait of Hormuz, through which about 20 percent of the world’s oil passes, May lead to significant price increases. On the other hand, the policies of major oil-producing countries contribute to determining future expectations. If these countries take steps to boost production or increase supplies to make up for any potential shortfalls, prices may be able to stabilize at lower levels. However, hawkish policies by OPEC members or political crises can lead to supply cuts, raising prices further. The impact of geopolitical tensions on global oil demand is another important factor. Although regional crises can temporarily raise prices, fears of a global economic slowdown could reduce oil demand, which could contribute to price stability or even a decline in the long run. Economic impacts from crises such as those of China, the world’s largest oil importer, could play a role in determining future trends. For Markets.
