By Ken Afor
Oil prices rose more than $1 on Friday after reports of US airstrikes on Iranian facilities in Syria raised fears that the escalating conflict between Israel and Hamas could affect supplies from the key Middle East producing region.
Brent crude futures for December delivery were up $1.16, or 1.3 percent, at $89.09 a barrel as of 03:38 GMT. U.S. crude oil West Texas Intermediate for December delivery rose $1.08, or 1.3 percent, to $84.29 a barrel.
The Pentagon said on Thursday that the strikes on two targets in eastern Syria used by Iran’s Islamic Revolutionary Guard Corps and Iran-backed groups were in response to recent attacks on US forces in Iraq and Syria.
These attacks have increased since the October 7 conflict between Israel and Hamas.
The strike did not immediately affect supplies, but the escalating conflict between US-backed Israel and Hamas in the Gaza Strip raised concerns that Iran, a major oil producer that supports Hamas, could cut off supplies.
If the war escalates further, it could also affect supplies from Saudi Arabia, the world’s biggest oil exporter, and other major Gulf producers.
Both Brent and WTI are poised for their first weekly decline in three weeks.
The geopolitical premium for these concerns has decreased as there have been no disruptions in crude oil supplies outside of the war zone.
“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.
Overnight, Israeli forces angered the Arab world by launching the biggest land assault on the Gaza Strip in its 20-day war against Hamas.
Prime Minister Benjamin Netanyahu said Israeli forces were still preparing a full-scale ground offensive, while the United States and other countries called for a delay over fears Israel could trigger hostilities on other fronts in the Middle East.
“It remains incredibly difficult even for the most knowledgeable regional watchers to make high conviction calls about the trajectory of the current crisis as the redlines that could bring more players onto the battlefield remain largely indiscernible,” RBC Capital analyst Helima Croft said in a note.
Goldman Sachs analysts kept their forecast for Brent crude prices at $95 a barrel in the first quarter of 2024, but added that the benchmark price could rise by 5 percent due to lower exports from Iran.
They said in a note that in the unlikely scenario of a trade disruption through the Strait of Hormuz, through which 17 percent of world oil production passes, prices could rise by 20 percent.
Voluntary supply cuts by Saudi Arabia and Russia by the end of the year will dampen global markets and support prices, analysts said.
