Brent hits $93 as Middle East strife heightens supply concerns
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[October 18, 2023] By
Natalie Grover
LONDON (Reuters) -Global oil benchmark Brent hit $93 a barrel on
Wednesday as the risk of escalating conflict in the Middle East
threatened to disrupt oil supplies from the region, with Iran calling
for an oil embargo to be imposed on Israel.
Brent crude futures was up $2.54, or 2.8%, to $92.44 a barrel at 1056
GMT. West Texas Intermediate crude (WTI) futures were up $2.54, or 2.9%,
at $89.2 a barrel.
Both benchmarks gained more than $3 to touch their highest levels in two
weeks earlier in the session.
Markets factored in risk premiums after hundreds of Palestinians were
killed in a blast at a Gaza City hospital on Tuesday that Israeli and
Palestinian officials blamed on each other.
Jordan then cancelled a summit it was to host with U.S. President Joe
Biden and Egyptian and Palestinian leaders. Biden arrived in Israel on
Wednesday pledging solidarity in its war against Hamas, and backing its
account that the Gaza hospital blast had been caused by militants.
"This turn of diplomatic fortunes again garners fear of conflict spread
and therefore the leap in oil," said John Evans of oil broker PVM.
Elsewhere in the Saudi city of Jeddah, Iranian Foreign Minister Hossein
Amirabdollahian urged members of the Organization of Islamic Cooperation
to impose an oil embargo on Israel.
OPEC+ is not planning to take any immediate action on Iran's call, two
sources from the producer group told Reuters.
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"A long occupation looms as the scenario that pushes Brent oil futures
above $US100/bbl because it raises the risk that the Israel Hamas
conflict expands and potentially draws in Iran directly," added Vivek
Dhar, an analyst at Commonwealth Bank of Australia.
Geopolitical tensions aside, other drivers are also supporting oil
prices.
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![](../images/101823PIX/busine57.jpg)
Crude oil storage tanks are seen from above at the Cushing oil hub,
appearing to run out of space to contain a historic supply glut that
has hammered prices, in Cushing, Oklahoma, March 24, 2016.
REUTERS/Nick Oxford//File Photo
![](http://archives.lincolndailynews.com/2023/Oct/18/images/ads/current/collision_lda_PPP_2023.png)
U.S. crude stocks fell by a much-steeper-than-expected 4.4 million
barrels in the week ended Oct. 13, compared to the forecast of a
300,000 barrel fall, according to market sources citing American
Petroleum Institute figures on Tuesday. [API/S]
Official U.S. government data is due later on Wednesday.
On the demand side, China's economy grew faster-than- expected in
the third quarter, official data on Wednesday showed, suggesting a
recent flurry of policy measures is helping to bolster a tentative
recovery.
Data also showed that the country's oil refinery throughput in
September hit a record daily rate, up 12% from a year earlier, as
refiners increased run rates to cater for strong demand for
transport fuel over the Golden Week holiday and improving
manufacturing activity.
But analysts sounded caution on China's economy, with the country's
real estate sector still in peril.
"The economic recovery is still in its infancy," Moody's Analytics
economist Harry Murphy Cruise said.
Meanwhile, higher-than-expected September U.S. retail sales spurred
expectations of another interest rate hike by year-end. Interest
rate hikes to curb inflation can slow economic growth and reduce oil
demand.
(Reporting by Natalie Grover, Arathy Somesekhar and Muyu Xu; editing
by Lincoln Feast, Jason Neely, Elaine Hardcastle)
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