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Oil prices surged on Thursday as escalating tensions in the Middle East raised concerns about potential disruptions to crude flows from the key exporting region. Despite a rise in U.S. crude inventories, the threat of a widening conflict overshadowed the stronger global supply outlook.
By 06:15 GMT, Brent crude futures were up 94 cents, or 1.27%, to $74.84 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 99 cents, or 1.41%, to $71.09. Both benchmarks had seen gains of over $1 earlier in the session.
Escalating Middle East Tensions Drive Oil Higher
The rise in oil prices follows an Israeli airstrike on central Beirut early Thursday, killing at least six people. The attack came after Israeli forces experienced their deadliest day in a year of clashes with the Iran-backed Hezbollah group on the Lebanese front.
This strike is part of an intensifying conflict that now spans multiple fronts, with Iran having fired more than 180 ballistic missiles at Israel earlier in the week. Hostilities have spread beyond Israel and the occupied Palestinian territories, extending into Lebanon and Syria, prompting fears of a wider regional war that could disrupt oil supplies.
U.S. Crude Inventories Rise Amid Supply Concerns
Meanwhile, the U.S. Energy Information Administration (EIA) reported a significant increase in crude inventories. Stockpiles rose by 3.9 million barrels to 417 million barrels for the week ending September 27, compared with expectations for a 1.3 million-barrel draw, according to a Reuters poll.
The rise in U.S. crude stocks indicates strong supply, which has tempered some concerns about disruptions in global oil output. However, the threat of a broader conflict in the Middle East, home to a significant portion of the world’s crude production, continues to fuel uncertainty.
Spare OPEC Capacity Offers Buffer, but Risks Remain
Despite the ongoing unrest, some investors remain calm, pointing to the fact that global crude supplies have yet to be directly impacted by the violence. OPEC is said to have enough spare capacity to offset the loss of Iranian oil production should Israel target the country’s facilities.
However, the market remains on edge. Traders fear that if Iran retaliates by attacking the oil infrastructure of its Gulf neighbors, the spare capacity might not be sufficient to prevent significant disruptions. This lingering risk has continued to support oil prices as the conflict develops.
As tensions rise and the potential for further escalation looms, investors will be closely monitoring the situation for any signs of supply chain disruptions. For now, the market remains volatile, with geopolitical risks playing a central role in driving oil prices.
