Oil Prices Inch Upward Amid Escalating Tensions in the Middle East

During Thursday’s trading session, oil prices edged up following a notable increase in the previous session, with investors bracing for potential escalation in the Middle East crisis, particularly involving Iran, OPEC’s third-largest oil producer.

Brent crude futures rose by 5 cents to reach $90.53 a barrel at 0632 GMT, while U.S. West Texas Intermediate crude futures gained 4 cents, reaching $86.25 a barrel.

The uptick in both contracts came after they surged more than 1% in the prior session, fueled by concerns over a potential stall in ceasefire talks between Israel and Hamas following an Israeli airstrike in Gaza that resulted in the deaths of three sons of a Hamas leader. Despite ongoing negotiations, no agreement has been reached in the more than six-month-old Gaza war.

Minutes from the U.S. Federal Reserve indicate that prolonged high interest rates could dampen economic growth and oil demand in the world’s largest economy. With officials expressing worries about stalled inflation progress, investors are now considering September as a likelier timing for the easing cycle to begin instead of the previously anticipated June rate cut.

As tensions persist in the Middle East, particularly with regard to potential Iranian retaliation over a suspected Israeli airstrike on Iran’s embassy in Syria earlier in the month, the region remains on alert. A Bloomberg report suggested that the U.S. and its allies anticipate imminent major missile or drone strikes by Iran or its proxies against Israel.

In response to these developments, U.S. Secretary of State Antony Blinken reaffirmed U.S. support for Israel against any threats by Iran, according to a statement from the U.S. State Department.

Oil traders are also awaiting the release of the monthly oil market report from the Organization of the Petroleum Exporting Countries (OPEC) later on Thursday, as well as the International Energy Agency’s oil market report scheduled for Friday. These reports are expected to provide further insights into the current state of the oil market amidst ongoing geopolitical tensions.