Your prices oil rose 1% on Wednesday due to concerns that the escalation of the conflict in middle East could threaten oil supplies from the world’s biggest producer, but a huge build in U.S. crude inventories limited gains.
Brent futures rose 84 cents, or 1.14%, to US$74.40 a barrel at 11:16 a.m. West Texas Intermediate (WTI) crude oil was up 87 cents, or 1.25%, at $70.70 a barrel.
The Middle East is on fire
Remember that yesterday, Tuesday, Iran fired more than 180 missiles at Israelthe biggest direct hit he has ever had on the country. Israel and the US have promised retaliation for the attack, a sign that the conflict in the region is intensifying.
Israeli retaliation could include targeting Iranian oil production facilities among other strategic locations, American news website Axios reported on Wednesday, citing Israeli officials.
On Wednesday, Iran said its missile attack on Israel had ended, ruling out further provocations. He added that any Israeli response to his attack would be met with widespread destruction.
The effects on oil
An attack on Iran’s oil infrastructure could provoke Tehran to respond with an attack on Saudi Arabia’s oil facilities, similar to the one carried out in 2019 on crude oil processing facilities, said Tamas Varga of oil brokerage PVM.
“Any one of these events would irreparably cause oil prices to rise significantly,” he said.
In another escalation of the conflict, the Israeli military on Wednesday sent regular infantry and armored units to participate in ground operations in southern Lebanon against Iranian-backed Hezbollah.
The United Nations Security Council scheduled a meeting on the Middle East for Wednesday and the European Union called for an immediate ceasefire.
OR Iran’s oil production rose to a six-year high of 3.7 million barrels per day (bpd) in August, ANZ analysts said.
A major escalation by Iran risks bringing USA to war,” Capital Economics said in a note. “Iran is responsible for about 4% of global oil production, but a key question will be whether Saudi Arabia will increase production if Iranian supplies are cut off.”
Offsetting earlier gains, oil inventories rose 3.9 million barrels to 417 million barrels in the week ended Sept. 27, according to the Energy Information Administration, compared with analysts’ expectations in a survey from Reuters of a draw of 1.3 million barrels. Gasoline stocks also rose last week, but distillate stocks fell.
With information from Reuters
