Oil prices snap two-week win streak despite settling higher on Iran attack fears

April 13, 2024 05:16 AM AEST | By Investing
 Oil prices snap two-week win streak despite settling higher on Iran attack fears

Investing.com -- Oil prices snapped a two-week wining streak despite settling higher Friday, as reports that Israel is bracing for a potential attract from Iran that could come as soon as this weekend, kept geopolitical tensions and the potential for supply disruptions in focus.

By 14:30 ET (18.30 GMT), the U.S. crude futures traded 0.75% higher at $85.66 a barrel and the Brent contract climbed 0.5% to $90.20 a barrel. Oil prices, which had traded sharply higher earlier in the day before pairing some gains, snapped a two-week win streak following big losses earlier this week as concerns about higher inflation dented hopes for a June Federal Reserve rate cut.

Middle East tensions rise

U.S. officials have predicted an attack by Iran against Israel, possibly over the weekend, in retaliation for a suspected Israeli air strike against a top Iranian military commander in Damascus earlier this week.

"I can't speak to the size, scale, scope of what that attack might look like," US National Security Council spokesman John Kirby (NYSE:KEX) said on Friday, though added that the threat was "viable."

But fears that an all out war could break out in the Middle East were cooled after the Financial Times reported that Iran is considering a retaliatory strike in a "calibrated" manner against Israel, suggested the Islamic Republic's isn't seeking major confrontation with Israel.

The risk that Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries and a major backing of Hamas in its conflict with Israel in Gaza, will be dragged into the battle, sparking a wider war in the Middle East has added to bets of crude supplies disruptions in the region.

“The risk of a geopolitical event occurring during the weekend is once again lifting the risk premium ahead of the weekend only to drop again on Monday," said Saxo Bank's Ole Hansen.

Baker Huges rig count slips; IEA cuts oil growth forecast

The number of oil rigs operating in the U.S. fell by 2 to 506, according to data from energy services firm Baker Hughes, pointing to further signs that the jump in oil prices is yet to meaningfully encourage drillers to step up activity amid concerns about demand.

The International Energy Agency cut its forecast for oil demand growth this year, by around 100,000 barrels per day to 1.2 million barrels per day, in its latest monthly report, released earlier Friday.

The global energy watchdog also said that it expected the pace of expansion to decelerate even further to 1.1 million barrels per day next year “as the post-Covid 19 rebound has run its course.”

Pullback is a possibility

If the threat of a disruption to global supplies doesn’t materialize, the bears will likely emerge from hiding in the second half of the year, according to Macquarie.

"We expect oil to turn bearish as the year progresses due to NOPEC supply growth, a material amount of OPEC+ spare capacity reentering the market, and the potential that continuing inflation softens demand," analysts at Macquarie said in a note.

The threat of supply disruptions from geopolitical tensions is enough in the near-term, however, to support oil prices, but "without an actual supply disruption associated with geopolitical events, Brent oil will struggle to hold above $90 a barrel in the second half of the year," Macquarie added.

(Peter Nurse contributed to this report.)

This article first appeared in Investing.com


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.


AU_advertise

Advertise your brand on Kalkine Media

Sponsored Articles


Investing Ideas

Previous Next
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.