Claims of violations of the Israel-Hezbollah ceasefire cause oil prices to soar

Oil prices edged up slightly on Friday amid renewed concerns about supply risks as Israel and Hezbollah exchanged accusations of violating their recent ceasefire. Investors were also awaiting a decision on output policy after the OPEC+ group postponed its meeting.

By 0516 GMT, Brent crude futures gained 10 cents, or 0.1%, to reach $73.38 per barrel. U.S. West Texas Intermediate (WTI) crude rose 45 cents, or 0.7%, to $69.17 per barrel, compared to Wednesday’s closing price.

For the week, Brent crude was down 2.4%, while WTI showed a 2.9% decline. Trading volumes remained low due to Thursday’s Thanksgiving holiday, which closed U.S. financial markets.

Tensions flared on Thursday as Israel and Hezbollah traded allegations of ceasefire breaches, though the ceasefire had initially reduced concerns of a broader conflict that could disrupt Middle Eastern oil supplies. Despite ongoing conflicts involving Israel, Hezbollah, and Hamas, oil production in the region has so far remained unaffected.

OPEC+, consisting of the Organization of the Petroleum Exporting Countries and allies like Russia, postponed its policy meeting to December 5 from December 1 due to scheduling conflicts. The group is expected to extend existing production cuts.

BMI, a subsidiary of Fitch Solutions, revised its Brent crude price forecast for 2025 down to $76 per barrel from $78, citing bearish market fundamentals, weak sentiment, and potential price pressures under a second Trump administration.

“While we anticipate OPEC+ will extend current cuts into next year, this move is unlikely to offset the production surplus we forecast for 2024,” BMI analysts commented.

Meanwhile, Russian strikes on Ukrainian energy infrastructure on Thursday raised concerns about potential retaliation that could disrupt Russian oil supplies, according to ANZ analysts.

Iran informed a U.N. nuclear watchdog of plans to install over 6,000 additional uranium-enriching centrifuges, as stated in a confidential report. Analysts at Goldman Sachs warned that stricter enforcement of Western sanctions on Iran’s crude output could reduce its oil supply by as much as 1 million barrels per day in the first half of 2024.

 

 

 

 

 

 

 

 

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