Oil Rises As Israel, U.S., Brace For Iranian Attack

by Ship & Bunker News Team
Friday April 12, 2024

Choppy trading throughout the week resulted in crude on Friday posting a loss of about 1 percent but a modest daily gain, as geopolitical tensions and a dour global demand for oil contributed to traders maintaining their largely rudderless trajectory.

For the day, Brent settled up 71 cents at $90.45 per barrel, while West Texas Intermediate settled up 64 cents to $85.66; for the week, Brent declined 0.8 percent and WTI fell more than 1 percent.

Friday's trading was influenced by U.S. president Joe Biden warning Iran not to attack Israel in revenge for the latter's lethal air strike last week, while confessing to media that Israel will be attacked "sooner than later."

A U.S. official says his country expects such an attack, but that it would not be big enough to draw his country into a war.

Still, Rebecca Babin, a senior energy trader at CIBC Private Wealth, noted that "Direct Iranian engagement puts higher odds of a potential supply disruption in the region, causing many traders to continue to reach for exposure in crude and upside crude call options.

"Heading into a weekend with significant headline risk, there are few sellers willing to step in and sell the rally."

Bob McNally, president of Rapidan Energy and a former senior energy official in the Bush administration, added that if Iran directly attacks Israel, Brent could spike to $100 per barrel.

Also on Friday, after a week of numerous analytical sources projecting a bullish oil market for later this year and beyond, the International Energy Agency cut its forecast for 2024 world oil demand growth to 1.2 million barrels per day (bpd) "as the post-Covid 19 rebound has run its course."

Ole Hansen, analyst at Saxo Bank, said, "For now the market is mostly in the Opec 2.2 million bpd demand growth camp as opposed to the IEA's reduced 1.2 million bpd forecast," referring to the Organization of the Petroleum Exporting Countries' forecast in its latest monthly report that also expected world oil demand to rise by 1.85 million bpd in 2025.

But Toril Bosoni, head of the oil industry and markets division at the IEA, maintained that "We're seeing the surge in [electric vehicle] sales, especially in China and also in Europe, really taking into gasoline demand, but also in the United States.

"EV sales and increased fuel efficiencies in the car fleet is lowering gasoline demand, at least in advanced economies and particularly in China."