Market Analysis

Oil prices rose by more than $1 on Thursday, as geopolitical tensions and output curbs overshadowed concerns about US Federal Reserve rate reduction.

Brent futures for June surged above $91 a barrel before finishing at $90.65, up $1.30, or 1.5%. US West Texas Intermediate (WTI) futures for May rose $1.16, or 1.4%, to $86.59 per barrel.

Both contracts closed on Thursday at their highest levels since October and continued to rise after the session concluded, boosted in recent days by heightened geopolitical tensions and potential supply risks.

Oil prices jumped on Thursday as news broke that Israeli embassies throughout the world had been placed on high alert due to growing fears of an Iranian attack on Israeli diplomats.

Iran, Opec's third-largest supplier, has promised retaliation against Israel for an attack on Monday that killed high-ranking Iranian military officers. Israel has not claimed responsibility for the strike on the Iranian embassy facility in Syria.

In a striking turn in tone, Washington offered its sharpest public criticism to Israel since the beginning of its conflict with Hamas on Thursday, warning that US policy on Gaza will be determined by Israel's actions to ensure the safety of Palestinian civilians and humanitarian workers.

On Thursday, the United States imposed fresh Iran-related counter-terrorism penalties on Oceanlink Maritime DMCC and its boats, citing their role in shipping supplies for the Iranian military.

According to the Treasury Department, the US is using financial penalties to isolate Iran, disrupting its capacity to fund proxy groups and limiting the country's support for Russia's war in Ukraine.

Prices were also supported when US Secretary of State Antony Blinken stated that Ukraine will eventually join NATO because member states' support for the country is "rock solid."

Oil's recent gains have also been accompanied by Ukrainian attacks on Russian refineries, which have reduced fuel supply, and news that Mexico's state energy company Pemex has asked its trading unit to cancel up to 436,000 barrels per day of crude exports this month as it prepares to process domestic oil at the new Dos Bocas refinery.

"All of these geopolitical factors happened at once, driving bullish sentiment and ultimately some profit taking," said Frank Monkham, senior portfolio manager at Altimo LLC.

On Wednesday, a gathering of top ministers from the Organization of Petroleum Exporting Countries and its allies (Opec+), including Russia, kept oil supply policy unchanged while pressing some countries to increase compliance with output curbs.

The association stated that some members will compensate for oversupply in the first quarter. It further stated that Russia would turn to output rather than export restrictions.

Investors will look to economic statistics and monetary policy for hints about the prospects for oil consumption.

According to Labor Department statistics, US unemployment claims surged more than predicted last week as labor market conditions steadily eased.

That occurred after Federal Reserve Chair Jerome Powell expressed caution on Wednesday regarding the timing of future interest rate cuts, following recent statistics showing stronger-than-expected job growth and inflation.

Paraphrasing text from "Reuters" all rights reserved by the original author.