Huge Crude Rise of Almost 6% as Investment Concerns Shift Yet Again On Middle East

Meanwhile, the IEA vows to help stabilize the market should shortages arise: File Image/Pixabay

After a week of tumultuous trading in which investors wavered between worrying about demand should the Israel/Hamas extend further into the Middle East and then dismissing the notion, Friday saw a massive 6 percent gain in prices – as investors decided the war will indeed broaden.

West Texas Intermediate settled up $4.78, or 5.8 percent, at $87.69 per barrel, while Brent settled up $4.89, or 5.7 percent, at $90.89 per barrel.

WTI gained more than 4 percent this week, ts biggest weekly gain since Sept. 1.

Lukman Otunuga, manager, market analysis at FXTM, commented on the events that motivated traders on Friday: "Escalating tensions in the Middle East, home to almost a third of global oil supply kept prices buoyed while the U.S. tightening its sanctions against Russia crude exports complemented upside gains."

Otunuga was referring to U.S. measures unveiled Thursday aimed at making it harder for Russia to skirt a cap on the price of its oil (it had been disclosed that the former Soviet Union had built its own fleet of vessels for the export of crude to avoid the cap).

As for the turnabout in concerns over the Israel/Hamas war, it was reportedly spurred by Iran’s foreign minister warning that Tehran-backed militants could open a new front if the blockade of Gaza continued; also, traders said Friday’s rally indicated that investors are removing bearish bets before the weekend.

Edward Moya, a senior market analyst at Oanda, said, “The oil market is very sensitive to developments with the Israel-Hamas war; there are fears that, even as we see US production hit record levels, we could see a major shock to supplies in the near future.”

Meanwhile, the International Energy Agency noted that the war had not yet affected supply and tried to alleviate concerns by stating it was ready to ensure markets remain “adequately supplied” in the event of an abrupt supply shortage - a move that could translate into member countries releasing emergency stocks and/or implementing demand restraint measures.