Oil Prices Hold Steady as Israel-Iran Conflict and Supply Issues Remain in Focus

Oil prices pull back after earlier gains as traders watch possible Israeli strikes on Iran and global supply risks. Brent crude remains above $75 with mixed demand.

Oct 24, 2024 - 09:25
Oct 24, 2024 - 09:26
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Oil Prices Hold Steady as Israel-Iran Conflict and Supply Issues Remain in Focus
Oil Prices Hold Steady as Israel-Iran Conflict and Supply Issues Remain in Focus

Oil prices slowed down after an earlier rise, as global markets closely monitor rising tensions in the Middle East. Brent crude, which initially jumped by as much as 2.1%, held just above $75 per barrel. The focus remains on a potential Israeli strike on Iran, following missile attacks earlier this month. The situation is tense, with U.S. Secretary of State Antony Blinken meeting Saudi Crown Prince Mohammed bin Salman in Riyadh to discuss a possible cease-fire in Gaza and Lebanon. Blinken also visited Israel, where officials have vowed to respond to Tehran’s actions.

The threat of Israeli retaliation has led to increased activity in oil markets, with traders hedging against the risk of price spikes. Brent crude contracts that protect against rising prices are in high demand, with bullish contracts reaching their highest levels since Russia’s invasion of Ukraine in 2022.

Oil prices have been on a rollercoaster this month as traders juggle concerns about supply disruptions and mixed demand signals. The Middle East, which produces about one-third of the world’s oil, faces potential threats to its output. At the same time, demand has been inconsistent. In China, the world’s largest oil importer, demand remains weak despite government efforts to stimulate the economy. On the other hand, U.S. demand has been stronger, with refinery output hitting a six-year seasonal high.

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The upcoming U.S. election is another key factor on investors’ minds, as it could have a significant impact on oil markets and broader economic policies.

Ole Hvalbye, an analyst at SEB, highlighted the challenges of navigating this uncertain market, saying, "The unpredictable geopolitical situation, along with concerns about a potential oil surplus in 2025, makes it risky to hold short positions right now."

Positive sentiment in the broader market also helped support oil prices on Thursday. Both European stocks and U.S. futures were up after several companies posted better-than-expected earnings reports.

Also Read: Oil Prices Rise as Israel-Iran Conflict Escalates and China Cuts Lending Rates

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