Oil Prices Rise Amid Middle East Tensions and China’s Economic Uncertainty
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Sulaiman - . October 17, 2024
- . Update: October 17, 2024 5:44 pm
Oil prices saw gains on Wednesday after a significant drop on Tuesday. This is because traders shifted their focus back to the ongoing tensions in the Middle East. The decline in Tuesday after the Chinese consumer prices rose less than expected that was indicating weaker demand. Additionally, the International Energy Agency lowered its global oil demand forecast for 2024 for the third consecutive time.
Several reports said that Israel informed the U.S. it wouldn’t target oil infrastructure of Iran. This announcement temporarily removed the “wartime premium” on oil prices. But after that Israel stated that it would make its own decisions regarding any strike on Iran, sparking speculation that it may still target oil-related assets.
Analysts said there is no clear factor driving prices higher now. IG analyst Yeap Jun Rong explained that market participants are downplaying the risk of disruptions in Middle East energy supplies. At the same time there is uncertainty surrounding China’s economic stimulus efforts, which has added to market hesitation.
Israel clarified its stance on Iranian oil targets, ING’s Warren Patterson mentioned that the impact on global oil markets would depend on which assets were targeted. Strikes on upstream oil assets could drive prices up, while strikes on downstream assets like refineries might have the opposite effect, as it could increase Iran’s crude oil exports. However, any direct escalation, such as an attack on an Iranian refinery, would likely push oil prices higher.
Traders are now eagerly awaiting more details on China’s stimulus plans. Sunday’s update from the Chinese government lacked specifics, particularly about the size of the stimulus, which disappointed markets and led to a sell-off, adding pressure on oil prices at the start of the week.
