Oil holds rally amid Middle East tensions

August 08, 2024 (MLN): Oil steadied after its biggest jump in a week on Wednesday as geopolitical tensions heightened in the Middle East.

Brent crude traded near $78.5 a barrel after surging 2.7% yesterday.

While West Texas Intermediate crude (WTI) was at $75.45 per barrel.

Israel continues to brace for an attack, although comments from Iran’s president during a phone call with his French counterpart hinted at a diplomatic path to de-escalation, as reported by Bloomberg.

Oil has rebounded after falling to a seven-month low on Monday amid a rout in global equity markets.

A halt to crude production from Libya’s biggest field has helped underpin the gains, while a rare cross-border attack by Ukrainian troops into Russia added to geopolitical tensions.

“We can’t ignore the supply risks,” said Zhou Mi, an analyst at the Chaos Research Institute in Shanghai.

However, there are still macro risks that could cause negative headwinds for oil, he added.

Official data out of the US on Wednesday showed crude stockpiles fell for a sixth week to their lowest since February.

That may alleviate some of the concerns about faltering demand in the biggest consumer, but there were builds at the key Cushing storage hub and in gasoline.

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