Rising tensions in the Middle East, particularly between Israel and Iran, have triggered a sharp increase in crude oil prices. With fears of supply disruptions looming, global crude markets are reacting quickly. In just three days, Brent crude oil prices have surged by nearly 5%, crossing $75 per barrel, while WTI crude has also risen above $71.
On October 1, Brent was trading at $69.92 per barrel, but by October 3, it reached $74.84 per barrel. Similarly, WTI crude prices jumped from $66.33 per barrel to $71.08 per barrel within the same timeframe. Meanwhile, on the Multi Commodity Exchange (MCX), crude oil prices spiked from Rs 5577 to Rs 5982.
Middle East Tensions Impacting Global Oil Supply
The surge in crude oil prices is primarily driven by the heightened conflict between Israel and Iran. Iran’s missile attacks on Israel have intensified fears of supply disruptions from the region, which could impact the global oil market significantly. Market experts are closely monitoring the situation, with concerns growing that if the conflict worsens, it could lead to a shortage in oil supply, pushing prices even higher.
Energy expert Narendra Taneja shared his insights, stating that the ongoing tension has raised concerns over crude supply in the market. He further noted that while Israel has strong backing from the United States, Iran’s response is uncertain, and the market is keeping a close eye on developments in the region.
G7 and US Response: No Support for Israeli Attack on Iran
The G7 nations have made it clear that they do not support an Israeli attack on Iran’s nuclear sites, although they acknowledged Israel’s right to retaliate. The United States has also expressed the possibility of imposing additional sanctions on Iran if tensions continue to escalate. Ground battles between Israel and Hezbollah have further fueled the instability, with Israeli forces reportedly entering Lebanon.
OPEC+ Production and Market Dynamics
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, have also played a role in the recent crude oil price movements. OPEC+ has announced plans to increase crude oil production starting in December, but market experts caution that the increase may come too late to offset the potential supply disruptions caused by the Middle East conflict.
Narendra Taneja mentioned that OPEC+ members, especially Saudi Arabia, are considering ramping up production to stabilize the market. However, the ongoing deadlock between some OPEC+ countries could delay these efforts.
What Experts Predict for Crude Oil Prices
With the Middle East crisis unfolding, energy analysts are offering a range of predictions on where crude oil prices could head next. Probal Sen, an energy analyst at ICICI Securities, believes that if geopolitical tensions worsen, crude prices could face further upward pressure. However, he emphasized that it’s too early to make definitive predictions and suggested adopting a “wait and watch” approach for now.
Several brokerage firms have also provided their forecasts. Goldman Sachs predicts that Brent crude could hit $77 per barrel, while UBS, Bank of America, and JP Morgan have set a slightly lower target of $75 per barrel. On the other hand, Wells Fargo expects crude prices to hover around $70, and Citi has forecasted a potential drop to $60 per barrel.
US Oil Inventory and Demand
Another factor influencing crude prices is the recent data from the US Energy Information Administration (EIA). According to the EIA, US oil inventories have risen by 3.9 million barrels, while gasoline demand has dropped to its lowest level in six months. This increase in supply, combined with weak demand, has provided some relief to the global oil market.
As the market braces for further developments, both geopolitical tensions and OPEC+ decisions will play a crucial role in determining the direction of crude oil prices in the coming weeks.
