In the early hours of Asian trading on Friday, oil prices saw a slight increase, maintaining their strong gains for the week. Investors are carefully considering the ongoing conflict in the Middle East and the potential impact on crude oil flows, despite a well-supplied global market.
At 0010 GMT, Brent crude futures rose by 9 cents, or 0.12%, reaching $77.71 per barrel. Meanwhile, U.S. West Texas Intermediate crude futures were up by 8 cents, or 0.11%, hitting $73.79 per barrel. Both benchmarks are poised for weekly gains of approximately 8%.
President Joe Biden’s statements on Thursday regarding the possibility of strikes on Iran’s oil facilities in response to Tehran’s missile attack on Israel contributed to a 5% surge in oil prices. Investors are now factoring in the potential for supply disruptions in the Middle East, which represents a significant portion of global supply.
ANZ analyst Daniel Hynes noted, “The market movement has been intensified by bearish investors reversing their bets on lower prices. Further gains could occur if investors begin to take bullish positions in oil.”
Despite concerns over supply, OPEC’s spare production capacity and the lack of actual disruptions in global crude supplies due to the Middle East unrest have helped temper fears. Additionally, the resolution of a leadership dispute over Libya’s central bank led to the reopening of all oilfields and export terminals, ending a crisis that had greatly reduced oil production.
Iran and Libya, both OPEC members, play significant roles in global oil production. In 2023, Iran produced about 4.0 million barrels per day, despite operating under U.S. sanctions, while Libya produced approximately 1.3 million barrels per day last year.
Overall, the ongoing conflict in the Middle East and its potential impact on oil supplies continue to drive market sentiment and prices. Investors should closely monitor geopolitical developments and production updates to make informed decisions about their investments.