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Editor in Chief Mohamed Wadie

Oil Prices Rebound amid Geopolitical Tensions


Tue 28 May 2024 | 11:57 PM
Taarek Refaat

Oil prices rebounded from the selling that dominated the market scene last week, amid increasing tensions in the Middle East, after a ship was attacked in the Red Sea and the arrival of Israeli tanks in central Rafah.

West Texas Intermediate (WTI) rose 2.7% to settle above $79 a barrel. The gains came after prices fell to their lowest levels in three months last week, sending futures contracts into the oversold zone.

Latest Oil Prices

WTI CRUDE            • 80.17 +2.45 +3.15%

BRENT CRUDE       • 84.51 +1.41 +1.70%

MURBAN CRUDE  • 85.22 +0.98 +1.16%

NATURAL GAS      • 2.590 +0.070 +2.78%

LOUISIANA LIGHT  • 80.52 -1.53 -1.86%

BONNY LIGHT         • 80.95 +0.14 +0.17%

OPEC BASKET    .    • 81.92 -0.49 -0.59%

MARS US                 • 76.83 -1.47 -1.88%

GASOLINE               • 2.518 +0.034 +1.37%

The attack on a Greek-operated bulk tanker in the Red Sea, and the Israeli advance on the southern Gaza city, also revived a geopolitical risk premium that disappeared last week, when signs of a supply glut also weighed on crude oil.

The fall of an Egyptian soldier in a clash with Israeli forces at a border crossing in Gaza increased the risks to oil markets, as well as an Israeli raid that killed about 45 Palestinians in a camp for displaced people.

Despite the continuing escalation of the war, flows of crude oil from the Middle East - which account for a third of global supplies - have not been disrupted. However, Houthi attacks in the Red Sea have rerouted some flows.

Oil rose this year due to ongoing geopolitical risks and production cuts implemented by the OPEC+ alliance by about two million barrels per day, and the alliance is expected to extend the restrictions at next Sunday’s meeting until the second half of the year.

However, prices have fallen since early April amid signs of weak demand, causing Brent spot contracts to approach a contango structure.

Bearish, which indicates an abundance of supply compared to consumption.

Investors will also be looking for signs of fuel demand in the United States after Memorial Day weekend, which traditionally marks the start of the summer driving season.