Brent gains as hostilities intensify in Middle East

The front-month ICE Brent contract has jumped $2.19/bbl on the day, to trade at $91.97/bbl at 09.00 GMT.

PHOTO: Flags of Israel and Palestine. Getty Images

Upward pressure:

Brent futures erased the previous day’s losses as tension intensified in the Middle East after a massive explosion at a hospital in Gaza killed hundreds of civilians. The attack has raised concerns about oil supply disruptions from the region.

Following the blast, Jordan’s officials canceled a summit that was to be hosted in Amman today, where US President Joe Biden and other Egyptian and Palestinian leaders were to discuss the ongoing conflict in the Middle East.

Oil prices remained supported during the Asian trading hours "as fears grow over the conflict between Israel and Hamas,” two analysts from ING Bank said.

Besides, US commercial crude inventories showed a decline of 4.38 million bbls in the week ended 13 October, according to the American Petroleum Institute (API) data cited by Trading Economics. API's estimates provided additional support to Brent futures.

Downward pressure:

Venezuela’s government and the opposition party have agreed to host elections in the country in the second half of 2024, granting its citizens democratic rights. The decision has paved the way for the US to ease some of its sanctions on Venezuela, including the inflow of Venezuelan oil in the market again.

This news has eased some concerns about supply tightness in the global market.

Meanwhile, oil market analysts remain concerned about yet another interest rate hike by the US Federal Reserve (Fed) in the fourth quarter of 2023 in a bid to tame inflation.  

Higher interest rates influence consumer spending and have an adverse effect on demand for dollar-denominated commodities like oil.

By Aparupa Mazumder

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