Oil Settles From 3% Spike As Iran Vows Revenge Against Israel

OPEC's output delay calms otherwise jittery traders: File Image/Pixabay

Oil prices on Monday briefly hit a 3 percent rise before steadying towards the end of the session, as concern over Iran’s fiery rhetoric against Israel gave way to the jitters regarding the impending U.S. presidential elections.

Dennis Kissler, senior vice president of trading at BOK Financial, said after Iran’s supreme leader warned of a “crushing response” to Israel, "Middle East tensions are once again on the forefront as traders await the Iranian response attack.”

Trading was also said to be influenced by the lingering calm caused by the Organization of the Petroleum Exporting Countries (OPEC) earlier deciding to delay its output cut of 2.2 million barrels per day (bpd) for another month in December.

Harry Tchilinguirian, head of oil research at Onyx Commodities Ltd., said of OPEC’s decision, "Market conditions won out: OPEC+ showed it couldn’t ignore the current macroeconomic economic realities centered on China and Europe, which point to weaker oil demand growth."

Jorge Leon, senior vice president at Rystad Energy, added, “Given all the geopolitical tension in the Middle East and, perhaps more importantly, the upcoming U.S. presidential elections, it makes perfect sense for OPEC+ to postpone the unwinding of the voluntary cuts for an extra month.”

Also on Monday, traders were also eyeing the latest tropical storm forecast to form in the Caribbean and threaten offshore oil production along the Gulf of Mexico; Shell announced it had moved non-essential personnel from six platforms as a precautionary measure but expected no impact on its production in the region.

In other oil news at the start of this trading week, Aurelien Hamelle, sustainability and strategy director at TotalEnergies, stated at a press conference that that global oil demand will peak after 2030, elaborating that "There are around 4.5 billion people today with insufficient access to energy in the so-called 'global south'... If you add to that the expected growth in population to 2050 you would need to multiply current energy production by four to pull them out of energy poverty."