Commodities
Oil prices soar on supply concerns as Middle East conflict escalates
© Reuters.
Investing.com — Oil prices climbed sharply Monday as the escalating violence in the Middle East raised concerns about the security of future crude supply.
By 04:45 ET (08.45 GMT), the futures traded 3.1% higher at $85.33 a barrel, while the contract climbed 2.8% to $86.92 a barrel.
Regional conflict escalation could hit supply
The Israeli-Palestinian conflict escalated to full-blown war over the weekend, as members of the Islamist group Hamas attacked several Israeli towns, killing hundreds of Israelis and triggering a wave of retaliatory Israeli air strikes on Gaza that have also resulted in many deaths.
While the current scope of the conflict has no direct impact on global oil supply, prices are rising because of worries that neighboring countries will be dragged in.
The Wall Street Journal reported that Iranian security officials helped Hamas plan its attack on Israel in a series of meetings over months, something denied by Iran’s mission to the United Nations on Sunday.
Washington has taken a softer stance to the Iranian oil embargo over the course of the year, attempting to smooth relations with Iran as part of an attempt to find a regional peace deal and amid concerns over rising oil prices.
However, a tighter enforcement of sanctions is a possible response if a link to Tehran is established.
“Enforcing these sanctions more strictly would mean the potential loss of at least 500Mbbls/d,” analysts at ING said, in a note. “If this loss materializes, the surplus we currently forecast in 1Q24 would largely disappear, leaving the market roughly in balance early next year. For the remainder of 2024, we would see deeper deficits, particularly over 2H24. Under this scenario, there would be some upside risk to our current Brent forecast of US$90/bbl for next year.”
The worry then is that Iran responds by disrupting oil shipping in the Strait of Hormuz, potentially impacting around a fifth of the world’s supplies.
Growth, interest rate worries hit crude last week
This news occurred after oil prices posted their steepest weekly losses since March, with Brent posting a decline of about 11% and WTI recorded an over 8% drop, on worries that persistently high interest rates will slow global growth and hammer fuel demand.
Evidence of that slowing global growth emerged Monday, as fell 0.2% on the month in August.
Although this represents an improvement from the revised 0.6% drop the previous month, this is the fourth consecutive month this sector has retreated in the eurozone’s most important economy, stoking recession fears.
Attention this week is likely to be on the release of U.S. , especially after Friday’s blockbuster .
Hot inflation figures could reinforce the Fed’s message that interest rates need to remain higher for longer.
(Reuters) – Goldman Sachs adjusted its expectations for OPEC+ oil production saying it now expects three months of production increases starting from December instead of October, the bank said in a note on Friday.
OPEC+ has agreed to delay a planned oil output increase for October and November, the producers group said on Thursday after crude prices hit their lowest in nine months, adding it could further pause or reverse the hikes if needed.
However Goldman Sachs maintained its range of $70-85 per barrel and a December 2025 Brent forecast at $74 per barrel.
The investment bank expects the effects of a modest reduction in OPEC+ supply in the upcoming months to be counterbalanced by easing effects from the current softness in China’s demand and faster-than-expected recovery of Libya’s supply.
“We still see the risks to our $70-85 range as skewed to the downside given high spare capacity, and downside risks to demand from weakness in China and potential trade tensions,” Goldman Sachs said.
Brent crude futures were down $1.63, or 2.24%, to $71.06 a barrel on Friday, their lowest level since December 2021. U.S. West Texas Intermediate crude futures fell $1.48 on Friday, or 2.14%, to $67.67, their lowest since June 2023. [O/R]
Investing.com — Oil prices settled lower Friday, ending the week with a loss as weaker U.S. nonfarm payrolls stoked concerns about an economic-led slowdown in crude demand.
At 2:30 p.m. ET (1430 GMT), the futures (WTI) traded fell 2.1% to settle at $67.67 a barrel, while contract fell 2.2% to $71.06 per barrel.
U.S. economic slowdown worries resurface after weak jobs report
The US economy added fewer jobs than anticipated in August, but rose from a sharply revised July figure, according to Labor Department data that could factor into the Federal Reserve’s next policy decisions.
Nonfarm payrolls came in at 142,000 last month, up from a downwardly-revised mark of 89,000 in July. Economists had called for a reading of 164,000, up from the initial July mark of 114,000.
Following the release, bets that the Fed will introduce a deeper 50 basis-point rate cut — rather than a shallower 25 basis-point reduction — increased.
Concerns about the demand come just a day after OPEC+ said it had agreed to postpone a planned increase in oil production for October and November.
U.S., Europe working on Iran sanctions
Geopolitical tensions ratcheted up on Friday after the U.S. and Europe they were working on sanctions to impose on Iran after the Tehran sent missiles to Russia.
The U.S. had previously warned Iran about transferring missiles to Russia, saying it would represent a major escalation in Iran’s support of Russia’s war against Ukraine.
Investing.com — Oil prices settled lower Friday, ending the week with a loss as weaker U.S. nonfarm payrolls stoked concerns about an economic-led slowdown in crude demand.
At 2:30 p.m. ET (1430 GMT), the futures (WTI) traded fell 2.1% to settle at $67.67 a barrel, while contract fell 2.2% to $71.06 per barrel.
U.S. economic slowdown worries resurface after weak jobs report
The US economy added fewer jobs than anticipated in August, but rose from a sharply revised July figure, according to Labor Department data that could factor into the Federal Reserve’s next policy decisions.
Nonfarm payrolls came in at 142,000 last month, up from a downwardly-revised mark of 89,000 in July. Economists had called for a reading of 164,000, up from the initial July mark of 114,000.
Following the release, bets that the Fed will introduce a deeper 50 basis-point rate cut — rather than a shallower 25 basis-point reduction — increased.
Concerns about the demand come just a day after OPEC+ said it had agreed to postpone a planned increase in oil production for October and November.
U.S., Europe working on Iran sanctions
Geopolitical tensions ratcheted up on Friday after the U.S. and Europe they were working on sanctions to impose on Iran after the Tehran sent missiles to Russia.
The U.S. had previously warned Iran about transferring missiles to Russia, saying it would represent a major escalation in Iran’s support of Russia’s war against Ukraine.
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