Crude Oil Prices Increase Due to Concerns Over Middle East Supply Disruptions

Oil prices saw an increase on Thursday due to rising concerns that the intensifying conflict in the Middle East could disrupt crude supplies from this significant exporting region.

As of 08:40 ET, futures were up 2.2% at $71.61 per barrel, while the contract rose 1.9% to $75.33 per barrel.

Crude Prices Climb Amid Middle East Tensions

Crude benchmarks are trending upward as traders anticipate a response from Israel following Iran’s launch of over 180 missiles into its territory. The potential for a retaliatory strike targeting Iranian oil infrastructure raises concerns about the supply stability of a key OPEC member.

"Analysts have indicated that Israel might consider targeting Iranian oil facilities, which could significantly elevate oil prices depending on the extent of the attack," noted analysts at ING in a report. "With Iran exporting approximately 1.7 million barrels per day, any disruption could be quite impactful." They added that while a limited response might focus on missile launch sites, a broader escalation could involve strikes on Iranian nuclear facilities, which might complicate the geopolitical landscape, especially with upcoming U.S. elections.

OPEC+ Maintains Output Policy

OPEC and its allies, collectively referred to as OPEC+, convened on Wednesday and decided to maintain its current output policy. Starting in December, the group plans to increase production by 180,000 barrels per day each month.

According to an OPEC+ source familiar with the discussions, the only remark regarding the geopolitical situation was a desire for de-escalation. Although OPEC has enough spare capacity to offset potential losses in Iranian oil supply, much of this capacity is located in the Middle East Gulf, an area that could be at risk if tensions escalate further, as noted by Giovanni Staunovo, an analyst at UBS.

U.S. Crude Inventories Increase

The Energy Information Administration reported on Wednesday that U.S. crude inventories rose by 3.9 million barrels to 417 million barrels for the week ending September 27, contrasting with expectations of a 1.3 million barrel decline.