“If there’s any major oil price spikes, that will be immediately felt at the pump, and that’s what American voters care about more than anything else in terms of daily pricing,” says our expert @hgloystein.
And a rise in prices would be bad for Harris.https://t.co/teXdTSQWBc
— Eurasia Group (@EurasiaGroup) October 6, 2024
Oil prices have surged above $80 as conflict in the Middle East and the threat of Hurricane Milton in the Gulf of Mexico raise fears of supply disruptions. Brent crude, the global oil benchmark, climbed 3.7 percent to settle at $80.93 a barrel, its highest level since August. These gains follow a sharp drop in oil prices since early April, with Brent rising more than 8 percent over the past week.
As the conflict in the Middle East escalates, the global economy is at risk of a debilitating force: an oil supply shock. My story. https://t.co/pD3VJ6oU8n
— Peter S. Goodman (@petersgoodman) October 7, 2024
Phil Flynn of the Price Futures Group stated, “The market is reacting to the risk of Israeli strikes on Iranian oilfields and the potential impact of Hurricane Milton, which could shut down Gulf of Mexico oil and gas production.” He explained that any loss of Iranian oil would push the market into a supply deficit at a time when the US Strategic Petroleum Reserve has been depleted. Concerns have mounted following Iran’s missile attack on Israel last week, with traders fearing further strikes on energy infrastructure or disruptions in the Strait of Hormuz. Hurricane Milton, a Category 5 storm heading towards Florida’s west coast, has prompted Chevron to evacuate personnel and halt production at one of its platforms in the Gulf of Mexico.
Oil prices already surging
Brent crude surges above $80 as conflict and storm spark supply fears https://t.co/HlsCwKpjnG via @ft— Maleeha Lodhi (@LodhiMaleeha) October 8, 2024
The US benchmark, West Texas Intermediate (WTI) crude, also saw a sharp increase, rising nearly 4 percent to exceed $77 a barrel. Market dynamics are shifting, with hedge funds readjusting their positions.
oil prices surge amid conflict
Data from ICE indicated that funds trimmed their large short bets against Brent and increased their long positions right at the beginning of the recent rally. The conflict between Israel and Hamas continues to escalate. Ceremonies in southern Israel were interrupted by Hamas rockets, which also triggered sirens in Tel Aviv.
Israeli forces engage in a new offensive in northern Gaza and trade fire with Hezbollah in Lebanon. US President Joe Biden revealed that Israel had discussed striking Iran’s oil facilities but suggested they consider other options. “If I were in their shoes, I’d be thinking about other alternatives than striking oilfields,” said Biden.
Goldman Sachs analyst Daan Struyven warned clients that a six-month disruption hitting about 1 million barrels per day (b/d) could push Brent prices to $85 next year, assuming OPEC offsets the shortfall. Without such an offset, Brent prices could climb to the mid-$90s. The market remains in a state of heightened alertness as geopolitical tensions and natural disasters loom, with traders closely monitoring developments in both the Middle East and the Gulf of Mexico.
