[ad_1]
Oil futures edged lower Wednesday, with traders awaiting any sign the Israel-Gaza war will spill over to threaten crude supply.
Price action
-
West Texas Intermediate crude
CL00,
-1.00%
for November delivery
CL.1,
-1.00% CLX23,
-1.00%
fell 65 cents, or 0.7%, to $85.32 a barrel on the New York Mercantile Exchange. -
December Brent crude
BRN00,
-0.87% BRNZ23,
-0.87% ,
the global benchmark, was off 51 cents, or 0.6%, at $87.15 a barrel on ICE Futures Europe.
Market drivers
Oil futures were lower for a second straight day after spiking more than 4% on Monday as traders reacted to the weekend attack by Hamas that prompted a declaration of war by Israel.
Israel isn’t a major oil producer, but investors are focused on whether the conflict escalates. The Wall Street Journal on Sunday reported that Iranian military officials helped plan and coordinate the Hamas attack. White House national security adviser Jake Sullivan has described Iran as “complicit” in the attacks, having long provided funding and training to Hamas, but has said the U.S. so far hasn’t had confirmation Tehran had advance knowledge of the attack.
Iranian oil exports fell sharply after the Trump administration withdrew the U.S. from a nuclear accord with Tehran in 2018 and reimposed sanctions. Production and exports have since recovered partially, with output hitting 3.1 million barrels a day this summer, according to data cited by Commerzbank. Exports were estimated to have recovered to around 2 million barrels a day.
“If the conflict is contained to Israel and Hamas we would expect the current risk premium to slowly erode. However, there is still a risk that this escalates, particularly if there is any Iranian involvement,” analysts at ING wrote in a note. “Under this scenario, stronger enforcement of U.S. sanctions on Iranian oil would tighten up the oil market through 2024.”
Brent and WTI in late September hit 2023 highs above $90 a barrel on concerns over a growing supply deficit, but retreated sharply last week.
[ad_2]
Source link
