Oil prices experienced a significant increase on Thursday as concerns grew over the potential disruption of crude flows from the Middle East, a key exporting region.
By 08:40 ET (12.40 GMT), the price of crude oil futures rose by 2.2% to $71.61 a barrel, while the contract climbed 1.9% to $75.33 a barrel.
Crude Oil Prices Respond to Middle East Tensions
The surge in crude oil prices is attributed to escalating tensions in the Middle East, particularly between Israel and Iran. Iran recently fired more than 180 missiles into Israel, prompting concerns about potential retaliation that could target Iranian oil infrastructure. This has raised fears of disruptions in the oil supply from a major OPEC member.
Analysts at ING noted, “There have been suggestions that Israel could target Iranian oil facilities, which would have the potential to push oil prices significantly higher depending on the scale of the attack. Iran exports roughly 1.7 million barrels per day of crude oil, so the potential impact is meaningful.
OPEC+ Maintains Output Levels
Meanwhile, the Organization of Petroleum Exporting Countries and its allies, known as OPEC+, recently met and decided to keep their output policy unchanged. The group had previously planned to raise output by 180,000 barrels per day each month starting in December.
An OPEC+ source mentioned, “The only thing mentioned about the geopolitical situation and the conflict was the hope for non-escalation.”
US Crude Inventories Increase
In addition to the geopolitical tensions, U.S. crude inventories saw a rise of 3.9 million barrels to 417 million barrels in the week ended September 27, according to the Energy Information Administration. This was contrary to expectations of a 1.3 million barrel decline.
Overall, the current situation in the Middle East has the potential to impact global oil prices and supply levels. Investors should closely monitor developments in the region as they could have significant implications for the energy market and the broader economy.
