Oil rises as U.S. Storm, Israel-Iran tensions feed market jitters

Business a.m.

Oil prices crept upward on Thursday, buoyed by a surge in fuel demand as a powerful storm made landfall in Florida, while Middle Eastern supply risks remained at the forefront of market concerns.

The apprehension surrounding the storm’s impact on oil markets led to gains in both Brent and WTI futures, with Brent rising 58 cents (0.8%) to $77.16 per barrel, while WTI increased 61 cents (0.8%) to reach $73.85 per barrel.

As Hurricane Milton bore down on Florida, a quarter of the state’s fuel stations ran out of fuel, exacerbating concerns about supply disruptions and providing a lift to crude prices.

The United States, being both the world’s leading oil producer and consumer, is particularly sensitive to these disruptions, as fuel shortages can have a significant impact on domestic demand and economic activity.

Following the barrage of missile strikes launched by Iran against Israel on October 1, crude prices saw a sudden spike, reflecting the heightened geopolitical tensions and the potential for retaliatory strikes against Iranian oil facilities. However, as Israel has yet to respond, oil benchmarks have receded, remaining largely flat throughout the week.

The threat of a potential response to Iran’s missile strike remained a key focus for the oil markets, with U.S. President Joe Biden reaching out to Israeli Prime Minister Benjamin Netanyahu to discuss Israel’s plans regarding Iran. However, ANZ analysts noted that there is growing concern that Israel’s allies have little influence on its decision-making, adding to the uncertainty in the region.

Tamas Varga, oil broker at PVM, cautioned that the lack of either a genuine demand excess or a supply shortage could keep the markets prone to downward pressure, despite the risk of an Israeli strike on Iranian oil infrastructure.