Oil Prices Jump Amidst Geopolitical Tensions, U.S Stockpile Falls
Oil prices increased as US inventories rose amid escalating geopolitical tensions in the Middle East, bolstering concerns over potential supply disruptions and strong demand prospect.
Price of international benchmark Brent crude rose by around 0.02%, trading at $68.05 per barrel, up slightly from $68.03 at the previous session’s close.
Similarly, US benchmark West Texas Intermediate (WTI) crude increased by 0.09%, settling at $65.50 per barrel, compared to $65.44 in the prior session.
The Counter-Terrorism Unit of the Kurdish Regional Government (KRG) announced Wednesday that 3 separate oil fields in the city of Duhok were targeted by bomb-laden drones in the morning.
Later in the day, the Hunt oil field was also attacked with no reported casualties or significant material damage. The US State Department condemned the attacks in a statement released Thursday, and warned such incidents pose a serious threat to Iraq’s economy and the future of international energy companies that invested in the country.
Israel’s airstrikes on Syria also gave support to the rising prices. The Israeli military targeted the presidential compound and the General Staff headquarters in Damascus, adding fuel to the existing turmoil in the oil rich Middle East.
Israel Army Radio reported that the military was preparing for clashes in Syria that could last several days. Israeli warplanes also targeted the 107th Brigade in Syria’s Latakia province, according to the reports on Thursday.
These escalations in clashes and diplomatic fever in the region fed fears of supply disruptions in the Middle East, which holds a significant portion of global oil reserves, supporting an uptick in the prices.
Meanwhile, signs of sustained strong demand in the US, the world’s largest oil consumer, was another contributor the upward trend in prices.
US commercial crude oil inventories decreased by 0.9% during the week ending July 11, according to data released by the Energy Information Administration (EIA) late Wednesday. Inventories fell by around 3.9 million barrels to 422.2 million barrels, surpassing market expectations of a 1.8 million-barrel draw.
Strategic petroleum reserves, which are excluded from commercial crude stocks, decreased by 300,000 barrels to 402.7 million barrels, the data revealed.
Over the same period, gasoline inventories rose by around 3.4 million barrels to 232.9 million.
EIA data showed that US crude oil production decreased by 10,000 barrels per day (bpd) to about 13.37 million bpd during the week ending July 11.
US crude oil imports increased by 366,000 bpd to approximately 6.38 million bpd, while exports rose by 761,000 bpd to around 3.52 million bpd over the same period.
In the Short-Term Energy Outlook (STEO) released on July 8, the EIA projected that crude oil output in the country would average 13.37 million bpd in 2025.
The drop in inventories pointed to a robust domestic demand, while the production decline reinforced supply concerns, both provided support to the increase in prices. #Oil Prices Jump Amidst Geopolitical Tensions, U.S Stockpile Falls#
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