SINGAPORE - Oil rose for a fourth day on escalating tensions in the Middle East after blowing past the US$90-a-barrel threshold in the previous session.
Global benchmark Brent climbed above US$91 to near the highest level since October, while West Texas Intermediate was close to US$87.
Israel has increased preparations for a potential retaliation by Teheran after it struck an Iranian diplomatic compound in Syria on April 1, stoking fears of a wider regional conflict, while US President Joe Biden toughened his stance on Tel Aviv in its war against Hamas.
Crude has surged by 18 per cent in 2024 amid geopolitical tensions in the Middle East and Ukraine, as well as Opec+’s supply restrictions and healthy demand. The conflict between Israel and Hamas had led to Houthi attacks on shipping in the Red Sea, pushing up transport costs, but has so far not escalated into a wider war in a region that accounts for around a third of the world’s oil supply.
Ceasefire talks between Israel and Hamas – which could see the release of hostages held in Gaza – remain deadlocked. Israel’s economy minister said he does not trust Qatar to act as a mediator with Hamas, designated a terrorist organisation by the United States and Europe.
“The wider Mid-East tensions stemming from the Gaza war are probably at the highest in months,” said Vanda Insights founder Vandana Hari. “Crude is reflecting that Mid-East conflagration fear premium.”
Israeli embassies across the world have been placed on high alert due to increasing threats of an Iranian attack on Israeli diplomats.
Iran, the third-largest producer in the Organisation of Petroleum Exporting Countries, has vowed revenge against Israel for the April 1 attack that killed high-ranking Iranian military personnel. Israel has not claimed responsibility for the attack.
In a sharp shift in tone, Washington issued its strongest public rebuke towards Israel on April 4 since the start of its war with Hamas, warning that US policy on Gaza will be determined by whether Israel takes steps to address the safety of Palestinian civilians and aid workers.
Earlier this week, Opec+ chose to stick with supply cuts for the first half of the year, keeping global markets tight and buttressing the case for higher prices.
A panel of key members led by Saudi Arabia recommended no policy changes at an online review meeting. That means roughly two million barrels a day of output curbs will remain in place.
Market watchers have become more bullish in recent weeks. JPMorgan Chase & Co said Brent has the potential to rally to US$100 a barrel in 2024 if Russia’s decision to cut production was not balanced out by other countermeasures. ANZ Banking Group, meanwhile, raised its three-month outlook to US$95. BLOOMBERG, REUTERS
