Summary
The article discusses the rise in oil prices due to two key factors: a decline in U.S. crude and gasoline inventories, and growing concerns about the potential escalation of the Israel-Gaza conflict, which could disrupt global oil supplies.
Aug 14 (SCA) – Oil prices increased on Wednesday following reports of decreased U.S. crude and gasoline inventories, alongside escalating concerns over the potential expansion of the Israel-Gaza conflict, which could impact global oil supplies.
Brent crude futures advanced 56 cents, or 0.7%, to $81.25 a barrel by 0540 GMT, while U.S. West Texas Intermediate crude rose 59 cents, or 0.8%, to $78.94 per barrel.
Iran, a key oil producer in the Middle East, has yet to retaliate following the assassination of a Hamas official in its capital, an event for which it holds Israel responsible. Any escalation in the Middle East conflict could drive oil prices higher over the next six months or even longer, according to Vivek Dhar, an analyst at Commonwealth Bank of Australia. “The magnitude of Iran’s response, along with Israel’s counteractions, will likely determine whether the current conflict expands into a regional one,” said Dhar.
“Market concerns are immediately focused on potential attacks on Iran’s oil infrastructure and supply. Iran represents 3-4% of global oil demand, with 25-50% of that being exported.”
Iran has vowed a strong response to the killing of the Hamas leader last month. Israel has not confirmed or denied involvement but is engaged in ongoing conflict with Hamas in Gaza following an October attack by the group. In response to potential threats, the U.S. Navy has deployed warships and a submarine to the Middle East. “A broader conflict in the Middle East could jeopardize not only Iranian oil supplies but also oil passing through critical chokepoints in the region,” noted analysts at ANZ Research in a Wednesday report.
“This scenario could put over 20 million barrels per day of oil at risk of disruption.”
In the U.S., crude oil and gasoline inventories saw declines last week, while distillate stocks increased, according to sources citing American Petroleum Institute data on Tuesday.
The API report indicated that crude stocks dropped by 5.21 million barrels for the week ending Aug. 9, with gasoline inventories falling by 3.69 million barrels and distillate stocks rising by 612,000 barrels. Decreasing inventories may signal stronger demand in the U.S., the world’s largest oil consumer.
However, oil price gains were tempered by the International Energy Agency (IEA), which maintained its 2024 global oil demand growth forecast on Tuesday but slightly reduced its 2025 estimate, citing a weakened Chinese economy’s effect on consumption.
