Oil prices up on Mideast tensions, weekly loss persists

Oil prices edged up roughly 1 per cent on Friday due to geopolitical tensions in the Middle East. Despite this gain, oil closed the week with losses due to the International Energy Agency’s (IEA) downward revision of global oil demand growth and concerns about a slower pace of US interest rate cuts, Reuters reported.

Brent crude settled 71 cents higher at $90.45 per barrel, while West Texas Intermediate (WTI) crude rose 64 cents to $85.66. However, both benchmarks ended the week down, with Brent falling 0.8 per cent and WTI dropping over 1 per cent.

Earlier in the week, oil prices surged near a six-month high on fears of retaliation by Iran, the third-largest OPEC producer, for a suspected Israeli airstrike on its embassy in Damascus.

“The main concern is a potential Iranian response to Israel,” said Andrew Lipow, president of Lipow Oil Associates. “The risk of supply disruptions keeps prices supported.”

While the US anticipates an Iranian attack on Israel, officials believe it wouldn’t escalate into a full-blown war. Iranian sources also suggest their response might aim to avoid major conflict.

Tim Snyder, an economist at Matador Economics, highlights supply chain disruptions as the bigger long-term risk, particularly if Iran follows through on its threat to shut down the Suez Canal.

The IEA further dampened the market by lowering its 2024 world oil demand growth forecast to 1.2 million barrels per day.