The oil price rose by 4 percent after Iran launched an attack on Israel, the latest escalation of the conflict in the Middle East. One-month contracts for crude (the international benchmark) increased by $3.10 or 4 percent to $74.95 per barrel. Iran – the regional power which supports militant group Hezbollah – launched a missile strike on Israel Tuesday evening, as residents were told to seek shelter.
West Texas intermediate (another leading benchmark) rose $2.87 or 4.2 percent to $71.04 per barrel. Brent crude’s rise also helped London’s oil giants. Shell grew by 53p or 2.2 percent to £24.78. BP gained 9 1/4p or 2.4 percent to 401p. Gold, which is often viewed as a safe-haven asset, increased by 1% to $2,661.99 per ounce.
Before the reports were released, oil prices were near their lowest levels in two weeks as concerns about the Middle East conflict escalating had been outweighed by the weak demand globally and the prospect of increased supply.
On Wednesday, a number of ministers representing the Opec+ group will gather to evaluate the market. However, it is not expected that any policy changes will occur. Opec+ is made up of 12 members of the Organisation of Petroleum Exporting Countries, as well as a group of producers of crude oil led by Russia.
The oil cartel, which met in June with energy ministers of the Opec+ members, outlined a plan for some of its member countries to undo some of the production restrictions that were put in place by the end of 2022. Opec+ has set a goal to increase monthly oil production by 180,000 barrels per day starting in December.
The cartel has agreed to deep cuts in production in late 2022. These totalled 5,86 million barrels per day, or about 5.7% of global demand. They have played a key role in stabilizing oil prices and easing demand concerns.
Oil prices dropped to a low of $20 per barrel during the Covid-19 pandemic. Oil prices reached a high of $120 per barrel in 2022 following Russia’s invasion.
Brent crude prices fell to $69.19 per barrel in September. The United States increased its production amid weak demand from China, and fears of escalating conflict in the Middle East.
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