A review of global crude prices on Friday, October 13, revealed that Brent crude shot up to $90 per barrel and has since then held above $90.
As of Sunday, October 15 at 5:49 AM (GMT+1) Brent crude was $90.89 per barrel.
The recent surge in crude oil prices can be attributed to various factors, with the primary one being the increasing tensions in the Middle East due to the ongoing conflict between Israel and Hamas.
This conflict has raised concerns about a potential ground attack by Israel, prompting preparations and mobilization of significant military forces.
Reports indicate that Israel’s military has advised 1.1 million people in the northern part of the strip to move to safer areas in the south.
Additionally, Israel has amassed a substantial number of troops, tanks, and artillery along the border of the territory, intensifying the geopolitical situation and impacting oil prices globally.
Note that the Iranian government has said that Iran has expressed the possibility of a new dimension being added to the ongoing conflict between Israel and Hamas. Traders responded by adjusting their positions, minimizing bets against the market, as they anticipated a potential invasion of Gaza.
Iran’s foreign minister issued a cautionary statement, highlighting the potential for Tehran-backed militants to join the conflict, creating an additional front in Israel’s confrontation with Hamas if the blockade of Gaza persisted. Given Israel’s urging for an evacuation of the northern part of Gaza, a ground assault by the Israeli military is anticipated soon, intensifying the tensions in the region.
The conflict between Israel and Hamas has sparked concerns about potential disruptions to oil production in the region. Meanwhile, the International Energy Agency (IEA) recently stated that the situation in the market is rife with uncertainty.
However, they emphasized that, as of now, the ongoing war has not directly impacted the physical supply of oil. It is important to note that during the recent Russian Energy Week International Forum held in Moscow, President Vladimir Putin emphasized OPEC’s strong commitment to ensuring stability in the global oil market, especially in the face of escalating tensions in the Middle East.
He highlighted the dedication of all OPEC members to upholding their agreements and effectively navigating through any challenges that might emerge in the process.
Putin’s remarks underscored the collective responsibility and determination of OPEC nations to maintain equilibrium in the oil market amidst geopolitical uncertainties.
There is currently a concerted effort to reduce oil production is currently underway, primarily orchestrated by OPEC countries, with significant contributions from Russia and Saudi Arabia, major stakeholders in the global oil market.
These production cuts have been in effect for several months and are intended to persist until the conclusion of 2023, showcasing the steadfast commitment of both Saudi Arabia and Russia to this strategic initiative.
As a direct result of these reductions in oil production by influential oil-producing nations, global oil prices experienced a noticeable uptick, reaching a peak of $97 per barrel at one point.
However, subsequent to this surge, oil prices have somewhat stabilized and retreated to around $84 per barrel as of last week.
The efforts to curb production have thus influenced market dynamics, impacting oil prices on the global stage.