Oil Rises As Iran Demands Embargo Against Israel

Meanwhile, Germany and UK wash their hands of Russia: File Image/Pixabay

With supply concerns reignited by Iran calling for an oil embargo on Israel plus a substantial U.S. stockpile draw, crude traders on Wednesday caused oil prices to rise by about 2 percent.

Brent settled up $1.60, or 1.8 percent, at $91.50 per barrel, while West Texas Intermediate settled up $1.66, or 1.9 percent, at $88.32.

Stockpiles declined by 4.5 million barrels during the week ended Oct. 13, according to the Energy Information Administration, the fourth decline in five weeks and source of worry for Phil Flynn, senior market analyst at Price Futures Group Inc.

He said of corresponding reports that supplies declined to 21 million barrels at the Cushing, Oklahoma storage facility to the lowest since October 2014, "The biggest concern in this report is Cushing, Oklahoma ... we're drawing that down to dangerously low levels that should be supportive for the entire complex."

More bullish news on Wednesday came from China, where official data showed faster-than-expected economic growth in the third quarter, and also from the U.S., which reported stronger than anticipated retail sales – although this triggered the familiar worry that banks would respond by hiking interest rates again before year-end.

Still, Edward Moya, senior market analyst at OANDA, stated in a note, "The latest round of U.S. and Chinese data suggest the world's two largest economies are supportive for steady or rising crude demand."

Meanwhile, Richard Bronze, an analyst at Energy Aspects, said of the Israel/Hamas conflict and Iran's call for an embargo, "Traders are watching closely for any sign the conflict is spilling over in ways that could have a big supply impact, but calls for an embargo will add to the comparisons to the 1970s crises that were already being discussed in the market, even if the impact is mostly symbolic for now."

Iran's sabre rattling had zero effect on the Organization of the Petroleum Exporting Countries: the cartel on Wednesday said it doesn't plan to take any immediate action or stage any extraordinary meeting to discuss the matter, and one source explained to Reuters that OPEC is not a political organization.

In other oil related news on Wednesday, Miguel Berger, Germany's ambassador to the United Kingdom, stated at the Energy Intelligence Forum in London that "There is no way back to energy relationship with Russia that we saw before the [Ukraine] war: this relationship has ended."

Graham Stuart, minister of state for energy security and net zero for the UK, seconded that his country was of like mind, "although the UK has a much lower energy relationship with Russia than most EU countries."