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Oil prices rose sharply on Friday, with Brent crude and U.S. West Texas Intermediate (WTI) both gaining over 2% as geopolitical concerns and supply factors bolstered the market. By early trading hours, Brent crude for January delivery climbed to $74.22 a barrel, up $1.41, while WTI rose to $70.72, gaining $1.46.
Geopolitical Tensions Fuel Price Rise
Market sentiment turned cautious following reports of escalating tensions in the Middle East. According to Axios, Israeli intelligence indicates that Iran may be preparing to launch a large-scale attack on Israel from Iraq, potentially involving drones and ballistic missiles. The timing could coincide with the U.S. presidential election on November 5. Such an escalation raises concerns about potential disruptions to oil supply routes in the region.
OPEC+ May Delay Planned Production Increase
Oil prices received additional support from expectations that OPEC+ may postpone its planned December production increase by at least a month. Sources close to the discussions reported that the organization is considering this move due to weak demand and rising supply levels, with a decision possibly coming as early as next week. This potential delay aligns with OPEC+’s recent caution in managing oil output amid fluctuating market conditions.
Weekly Trends: Volatility and Resilience
Despite Friday’s gains, oil prices are set to post weekly losses. Earlier in the week, prices dipped more than 6% following Israel’s October 26 airstrike on Iranian targets, which bypassed energy facilities and had minimal direct impact on oil infrastructure. The rebound in prices, however, shows resilience amid renewed Middle East tensions.
China’s Manufacturing Expansion and U.S. Stockpiles
Positive economic data from China also contributed to the oil price uptick. A private-sector survey released Friday showed that Chinese manufacturing activity grew in October, supported by recent government stimulus efforts. This news echoed official data, which reported the first expansion in six months, signaling potential demand recovery in the world’s largest oil importer.
In the United States, the Energy Information Administration (EIA) reported a surprise drawdown in crude inventories, coupled with a two-year low in gasoline stockpiles due to strong demand. Additionally, U.S. oil production reached a record high of 13.4 million barrels per day in August, underscoring the country’s robust output capabilities despite the unexpected dip in stockpiles last week.
Market Outlook
While this week’s price movements reflect the complex interplay of global geopolitical and economic factors, the focus remains on whether escalating Middle East tensions and OPEC+’s decisions on production will keep prices on an upward trend in the coming weeks.
