Oil prices increased on Thursday as investors grew concerned that an escalating conflict in the Middle East could potentially disrupt crude oil shipments from the region. However, gains were limited by an improved global supply outlook.
By 1211 GMT, Brent crude futures had risen by $1.52, or 2.06%, to $75.42 per barrel, while U.S. West Texas Intermediate crude futures climbed $1.58, or 2.25%, to $71.68.
"Crude oil has exhibited significant volatility, surging over 5% in the international market over the past two days due to escalating tensions in the Middle East. Iran's missile attacks on Israel on Tuesday intensified regional concerns, driving oil prices higher. Israel's threat of retaliation, particularly if it targets Iran’s oil infrastructure, could further support rising prices. Meanwhile, OPEC+ concluded its meetings this week, reaffirming their plan to increase output from December. The U.S. crude oil inventories rose once again, according to the U.S. EIA report released on Wednesday. Stocks increased by 3.9 million barrels, contrary to expectations of a 1.5 million barrel decline, which has tempered crude oil gains. We anticipate crude oil prices will remain volatile in today's session," said Rahul Kalantri, VP Commodities, Mehta Equities.
Concerns are growing in the market about the potential for Israel to strike Iranian oil facilities, heightening fears of Iranian retaliation. The strait, a critical logistical chokepoint, handles about 20% of the world's daily oil supply.
Early Thursday, Israel launched airstrikes on Beirut, killing at least six people, following the deadliest day for Israeli forces in a year of clashes with Hezbollah, an Iran-backed militant group.
Israeli Prime Minister Benjamin Netanyahu warned that Iran would face consequences for its missile attack on Israel on Tuesday, while Tehran cautioned that any retaliation would result in "vast destruction," intensifying concerns about a potential escalation into a broader conflict.
Concerns have been eased by OPEC's oil production capacity and the fact that global crude supplies remain unaffected by unrest in the key producing region. OPEC has sufficient spare capacity to offset a complete loss of Iranian supply if Israel targets the country's facilities.
