Middle East Tensions and Ceasefire Talks Keep Oil Markets Volatile

Petroleum Price

Oil prices rose on Friday and are on track for a weekly gain of more than 1%, as tensions in the world’s top oil-producing region, the Middle East, and a restart in Gaza ceasefire talks in the coming days kept traders on edge.

Brent crude futures climbed 45 cents, or 0.6%, to $74.83 a barrel by 0036 GMT while U.S. West Texas Intermediate crude was at $70.62 a barrel, up 43 cents, or 0.6%. MCX Crude oil prices opened at 5937 with a gain of 0.44%.

Petroleum demand and supply

Both benchmarks settled down 58 cents a barrel in the previous session after prices fluctuated against expectations of heightened or reduced tensions in the Middle East.

Oil traders are waiting for Israel’s response to a missile attack by Iran on Oct. 1 that may involve hitting Tehran’s oil infrastructure and disrupt supplies, although reports said Israel would strike Iranian military, not nuclear or oil, targets.

US and Israeli officials are set to restart talks for a ceasefire and the release of hostages in Gaza in the coming days. Previous attempts to reach a deal have failed.

US Secretary of State Antony Blinken said on Thursday that Washington does not want a protracted Israeli campaign in Lebanon, while France has called for a ceasefire and focus on diplomacy.

Ceasefire talks have a small net negative impact on oil prices, Sycamore said, adding the focus is more on the conflict in Lebanon and Israel’s potential response to Iran.

Petroleum News

The oil market has been gripped by concerns about the ongoing conflict in the Middle East and the possibility that it could disrupt oil supply.

Negotiators will gather in Doha, the capital of Qatar, in the coming days to try to restart talks toward a deal for a ceasefire and the release of hostages in Gaza.

Iran fired close to 200 missiles at Israel on October 1 and this led the international crude benchmark, Brent crude to surge about 8 per cent during the week ended October 4 on worries Israel would attack Iran’s oil infrastructure.

Crude oil prices settled down by 1.09% at 5,911, driven by concerns over excess supply and weak demand, particularly in China. China's economic slowdown continues to weigh on crude consumption, despite recent stimulus measures. Additionally, U.S. crudeinventories rose by 5.474 million barrels in the week ending October 18, 2024, well above the expected increase of 0.7 million barrels, adding to supply concerns. However, gasoline and distillate stocks showed declines, with distillate stockpiles down by 1.14 million barrels. On the geopolitical front, rising tensions in the Middle East are keeping oil prices from falling further.

Ongoing conflict, including Israel's strikes on Gaza, Lebanon, and Syria, could potentially disrupt supplies, supporting oil prices to some extent. Moreover, U.S. crude production increased by 100,000 barrels per day, reaching a record 13.5 million bpd for the week ending October 11, as reported by the U.S. Energy Information Administration (EIA). The EIA also revised its global oil demand growth forecast for next year down to 1.2 million barrels per day, citing weakening economic activity in China and North America. U.S. oil demand for 2025 is now expected to average 13.54 million bpd, down 1% from prior estimates.

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Expert Opinion

• It is expected that the crude oil market is experiencing fresh selling pressure, with open interest increasing by 3.13% to settle at 14,377 contracts. Prices declined by 65, and crude oil is currently finding support at 5,833, with a potential test of 5,756 if this level is breached.
• On the upside, resistance is seen at 6,041, and a move above this could push prices towards 6,172. Slowing demand for crude oil from China was one of the reasons for the recent weakness in the crude oil market. Various stimulus measures announced by Chinese authorities did not have much impact on the market.