Oil prices rose slightly on Wednesday after a sharp plunge in the prior session by more than 4% decrease following reports that Israel has informed the United States of its decision not to target Iran’s oil facilities. This announcement has alleviated concerns of a potential major disruption in oil supply from the Middle East.
Israel’s strategy regarding retaliatory actions against Iran includes confining strikes to military targets, with no intentions of attacking Iran’s oil industry or nuclear facilities, as conveyed by three senior officials from the Biden administration to NBC News.
The reassurance comes after Iran’s recent ballistic missile attack on Israel, which initially sparked fears of escalating tensions that could impact crude oil availability in the region.
The West Texas Intermediate November contract closed on Tuesday at $70.58 per barrel, marking a 4.4% decline of $3.25, while the Brent December contract settled at $74.25 per barrel, down $3.21 or 4.14%.
In the morning session of Asian trading hours, WTI rose 0.31% to $70.80 per barrel and Brent crude gained 0.26% to $74.44 per barrel.
Despite the recent spike in oil prices following Iran’s attack, the situation has calmed as Israel refrains from retaliation, prompting market attention to shift towards fundamental factors.
Forecasts suggest an upcoming oil surplus, prompting OPEC to reduce its 2024 oil outlook for the third consecutive month. Additionally, the International Energy Agency anticipates a slower growth in oil demand with an increase of approximately 900,000 barrels per day in 2024 and 1 million bpd in 2025, a significant deceleration compared to the 2 million bpd growth observed post-pandemic.
The IEA’s report highlighted a decline in Chinese oil demand by 500,000 bpd in August, continuing a four-month downward trend. In contrast, crude production in the Americas, primarily led by the U.S., is projected to expand by 1.5 million bpd this year and the next, as detailed by the IEA analysis.
