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Oil prices rebounded on Thursday, defying concerns over a surprise increase in U.S. crude stockpiles, as escalating geopolitical tensions in the Middle East raised concerns about potential supply disruptions.
Brent crude futures, the international benchmark, climbed 0.9% to $86.01 a barrel, while U.S. West Texas Intermediate crude futures also rose 0.9% to $81.60.
This upward movement comes despite a report from the U.S. Energy Information Administration (EIA) that revealed a larger-than-expected build in U.S. crude inventories last week. Analysts had anticipated a drawdown, but instead, stocks surged by 3.6 million barrels, fueling worries about weakening demand.
However, the market’s focus quickly shifted to the rising geopolitical risks in the Middle East. The ongoing conflict between Israel and Hamas in Gaza has intensified cross-border tensions with Lebanon’s Hezbollah, raising the specter of a wider regional conflict that could involve major oil producer Iran.
“Were contagion to occur, it could have a significant impact on crude supplies from the Middle East,” warned Panmure Gordon analyst Ashley Kelty.
The situation is further complicated by Turkish President Tayyip Erdogan’s vocal support for Lebanon, urging regional countries to demonstrate their solidarity.
Meanwhile, Israeli forces continued their operations in Gaza, leading to fierce fighting in the southern region of Rafah.
As the geopolitical landscape in the Middle East remains volatile, the potential for supply disruptions is keeping oil prices elevated, even in the face of bearish inventory data from the U.S. The market will be closely watching developments in the region for any signs of further escalation that could impact global oil supplies.
