Oil Rises As Analysts Brace For Possible Iran Action Against Israel

by Ship & Bunker News Team
Wednesday April 10, 2024

A lethal airstrike by Israel in Gaza caused analysts to realize that any ceasefire between that country and Hamas may be impossible, and as a result oil on Wednesday climbed  by 1.2 percent for two key commodities.

Brent settled up $1.06 to $90.48 per barrel, while West Texas Intermediate settled up 98 cents to $86.21.

The airstrike killed three sons of a Hamas leader, and Israeli war cabinet minister Benny Gantz said  that while Hamas has been defeated militarily, his country will fight it for years to come: "Fighting against Hamas will take time; boys who are now in middle school will still fight in the Gaza Strip."

The fear in analytical circles is that this stance will likely expand hostilities in the Middle East and may even involve Hamas-backed Iran, virtually assuring that the oil market will be impacted.

Giovanni Staunovo, an analyst at UBS Group, said, "Oil's next move will now depend on the type of response from Iran."

Earlier in Wednesday's session, oil prices fell when the Energy Information Administration reported that U.S. crude stocks climbed by 5.8 million barrels in the week ended April 5, more than double an expected 2.4 million barrel increase.

The EIA also reported a 2.1 million barrel per day (bpd) drop in oil product supplied (a proxy for fuel demand), and a 2.7 million bpd drop in crude oil exports.

Also affecting trading on Wednesday was CME Group calculations showing that traders in the U.S. Federal Reserve funds futures market are now expecting the Fed will not begin enacting interest rate cuts until September, meaning the resulting boost to economic growth – and demand for oil – would occur much later than hoped for.