October 27, 2023 (MLN): Global oil prices rose on Friday following the US airstrikes on two Syria-based facilities with links to Iran, triggering concerns that this could potentially trigger a broader regional conflict.

Brent crude is currently trading at $88.14 per barrel, up by 1.03% on the day.

While West Texas Intermediate crude (WTI) is trading at $84.14 per barrel, up by 1.12% on the day.

It is important to mention that Both Brent and WTI are on track to post their first weekly drop in three weeks.

The strikes on two facilities in eastern Syria used by Iran's Islamic Revolutionary Guard Corps and groups it backs were in response to recent attacks on U.S. troops in Iraq and Syria, the Pentagon said on Thursday, as Reuters reported.

Those attacks have increased since the start of the Israel-Hamas conflict on October 7.

Though the strike did not directly impact supply, it increases fears that the conflict in the Gaza Strip between Israel, backed by the U.S., and Hamas may spread and disrupt supply from major crude producer Iran, which backs Hamas.

A wider war could also impact shipments from Saudi Arabia, the world's largest oil exporter, and other large producers in the Gulf.

"As a trader I'm going to have to say we are somewhat out of our league here – trying to ascribe a value to geopolitics when no meaningful supply has been disrupted outside of the Levant," said Kelvin Yew, a senior oil trader at Ocean Leonid Investments.

Israeli forces carried out their biggest Gaza ground attack in their 20-day-old war with Hamas overnight, angering the Arab world.

Prime Minister Benjamin Netanyahu had said Israeli troops were still preparing for a full ground invasion, while the United States and other countries urged Israel to delay, fearing it could ignite hostilities on other Middle East fronts.

Goldman Sachs analysts have kept their first quarter 2024 Brent crude price forecast at $95 a barrel but added that lower Iranian exports could cause baseline prices to rise by 5%.

Prices could jump 20% in the less likely scenario of an interruption of trade through the Strait of Hormuz where 17% of global oil production transit, they said in a note.

Voluntary supply cuts by Saudi Arabia and Russia, which will be in place until the end of the year, are tightening markets globally and supporting prices, analysts said.

Copyright Mettis Link News

Posted on: 2023-10-27T12:55:52+05:00