Oil prices experienced a modest uptick of approximately 1 percent on Friday, attributed to escalating geopolitical tensions in the Middle East. However, despite this marginal gain, the week concluded with overall losses, primarily influenced by the International Energy Agency’s (IEA) downward revision of global oil demand growth and apprehensions surrounding a deceleration in US interest rate cuts, as per Reuters.
Brent crude settled 71 cents higher, reaching $90.45 per barrel, while West Texas Intermediate (WTI) crude climbed 64 cents to $85.66. Nevertheless, both benchmarks concluded the week on a downward trajectory, with Brent experiencing a decline of 0.8 percent and WTI dropping over 1 percent.
Earlier in the week, oil prices surged close to a six-month peak amidst concerns of potential reprisals by Iran, the third-largest producer within OPEC, following a suspected Israeli airstrike on its embassy in Damascus.
Andrew Lipow, president of Lipow Oil Associates, emphasized, “The main concern is a potential Iranian response to Israel. The risk of supply disruptions keeps prices supported.”
While US officials anticipate a potential Iranian attack on Israel, they express confidence that it would not escalate into a full-scale conflict. Iranian sources also suggest that any response would likely seek to mitigate the risk of a major confrontation.
Highlighting broader long-term risks, Tim Snyder, an economist at Matador Economics, underscored concerns regarding supply chain disruptions, especially if Iran proceeds with its threat to close the Suez Canal.
The market sentiment was further subdued by the IEA’s decision to lower its 2024 world oil demand growth forecast to 1.2 million barrels per day, adding to the prevailing downward pressure on prices.
