Oil rises as tensions rise in Middle East

Following the escalation of tensions in the Middle East, oil prices rose by 5 percent, erasing some of last week’s losses. The barrel price of US crude oil exceeded $86 as the risk of war returned to the markets. The price of a barrel of Brent oil, on the other hand, rose by 4 percent and is finding buyers at $87.95. Brent and US crude oil had lost around $10 last week due to the negative impact of high interest rates and slowing global growth on the oil demand outlook. According to Citigroup Inc. analysts Ed Morse and Eric Lee, the Israel-Hamas war has reduced expectations that Saudi Arabia will cut another 1 million barrels of oil per day. In their note, analysts stated that risks related to the possibility of an Israeli attack on Iran have increased. ING Groep Commodity Strategist Warren Patterson, who stated that the price difference in US crude oil at various maturities showed that there was not much change in the supply-demand balance, made the following assessment: “Nevertheless, uncertainty about how the situation will evolve will support prices.” Middle East stock exchanges also lost value after the attacks. Israel’s benchmark TA-35 index fell 6.4 percent, its biggest loss in three years. Saudi Arabia’s Tadawul All Shares Index fell 1.6 percent and Egypt’s EGX30 index fell 2.6 percent.