Irina Slav
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
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By Irina Slav – Aug 12, 2024, 1:40 AM CDT
Crude oil prices started the week up slightly, holding on to gains made last week after U.S. Defense Secretary Lloyd Austin announced a guided missile submarine would be deployed to the Middle East.
The move comes as Israel and its U.S. allies brace up for an attack by Iran and its regional allies in the Middle East in retaliation for the killing of Hamas leader Ismail Haniyeh in Tehran and that of a senior Hezbollah figure in Lebanon.
“Secretary Austin reiterated the United States’ commitment to take every possible step to defend Israel and noted the strengthening of U.S. military force posture and capabilities throughout the Middle East in light of escalating regional tensions,” a statement by the Pentagon said, as quoted by Reuters.
Brent crude last week rose by 3.5%, with West Texas Intermediate posting gains of over 4% on the prospect of an escalation in the Middle East. Earlier today, both benchmarks were on the rise once more, with traders at least temporarily shaking off concerns about the U.S. economy and Chinese oil demand.
“The immediate market concern will be attacks on Iran’s oil supply and infrastructure,” Commonwealth Bank of Australia analyst Vivek Dhar told Bloomberg. Even so, Dhar added “We see Brent oil futures trading between $75 and $85 a barrel in the short term,” noting that in case of a bigger war in the Middle East prices will jump.
Prices also received some support from statements made by U.S. Fed officials, who suggested last week that inflation may be declining sufficiently to motivate an interest rate cut sooner rather than later. Interest rates in the U.S. have been one of the main bearish factors for oil this year.
“All the elements of inflation seem to be settling down (and) I’m relatively hopeful based on the conversations I’m having that that’s going to continue,” Richmond Federal Reserve Bank President Thomas Barkin said, as quoted by Reuters, on Friday.
By Irina Slav for Oilprice.com
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Irina Slav
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
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