Oil prices surge on Iran retaliation concerns

Oil prices surged on Thursday and WTI price rose from $63.4 per barrel to 70.9 per barrel. If oil prices retreat, they may encounter support near $66.9 per barrel, while resistance may be found near $72.8 per barrel.

The ongoing crisis in the Middle East threatens to disrupt oil distribution. Concerns of a broadening conflict in the Middle East are boosting oil prices. The conflict between Israel and Hamas continues to escalate, threatening to affect oil supply and distribution. 

Israel launched a series of missiles against Iran over the weekend but did not inflict substantial damage. The Iranian government announced that there would be an appropriate response to Israel’s attack, but Iran’s President emphasized that they do not seek a war with Israel. On Thursday, however, a report stating that Iran plans an attack against Israel in the coming days from Iraqi soil boosted oil prices. In addition, Israel’s attacks in Gaza and Lebanon have continued unabated this week, providing support for oil prices. 

US crude oil inventories released on Wednesday showed an unexpected drop in US crude stockpiles, boosting oil prices. The US Energy Information Administration reported a weekly crude stockpile draw of 0.5M barrels for the week to October 25th, against expectations of a 1.5M barrel build and following a rise of 5.5M barrels the week before.

Oil prices are also kept in check by high central banks’ interest rates. The Federal Reserve cut its benchmark interest rate by 50 basis points to a target range of 4.75% to 5.00% in September, after holding interest rates steady since last July. Market odds of a 25-bp rate cut in November are currently approximately 90%.

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Written by:
Myrsini Giannouli

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