Brent rises on geopolitical risks
Oil prices have seen a notable rise, driven by rising tensions in the Middle East that threaten to disrupt crude flows from one of the world's most productive regions. In recent sessions, Brent crude futures have risen 1.27% to $74.84 per barrel, while West Texas Intermediate (WTI) has also seen increases, trading at $71.09.
The escalation of hostilities between Israel and Iranian-backed armed groups, such as Hezbollah, has generated concern in global markets. Israel recently carried out bombings in Beirut, escalating tensions and increasing nervousness about the possible repercussions on the region's energy infrastructure.
However, despite the rise in prices, the oil market remains relatively stable, with U.S. crude inventories reporting an increase of 3.9 million barrels, suggesting adequate supply to cope with any disruption. This abundant supply limits Brent's gains, as many investors believe that OPEC's ability to offset any supply losses could moderate the impact of a prolonged conflict. It is appreciable that while prices could remain elevated in the short term, Iran's oil infrastructure would not be a primary target for Israel, as an attack on these facilities could drive oil prices towards unsustainable levels for the global economy.
In conclusion, as geopolitical tensions continue to affect the oil outlook, the market appears to be well supplied, limiting gains amid uncertainty. Investors are closely monitoring the situation, waiting for a development that could alter this dynamic.
Ion Jauregui - Analyst ActivTrades
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