In a volatile oil market, prices continue to hover around the $86 mark as the United States intensifies diplomatic efforts to mitigate the ongoing crisis in Gaza. President Joe Biden is scheduled to visit Israel this week, aiming to prevent a regional conflagration that threatens oil markets and the stability of the Middle East.
Biden’s visit to Israel, planned for Wednesday, is a show of support following the Oct. 7 attacks by Hamas, which triggered the ongoing conflict. However, markets are on edge as Israel considers the possibility of a ground offensive in Gaza.
West Texas Intermediate (WTI) experienced a brief dip of just under one percent, influenced in part by Russia’s Central Bank reiterating expectations that OPEC+ might contemplate an increase in oil output at the outset of 2024. Russian Deputy Prime Minister Alexander Novak, in an interview with RT Arabic TV, noted that it is still too early to predict the decisions OPEC+ may make at its November meeting.
Crude traders are also closely monitoring events in Barbados, where the government of Venezuela is expected to sign a deal with the U.S.-backed opposition. This agreement, geared toward facilitating a freer presidential election next year, could potentially lead to the United States easing sanctions against Venezuela, which might, in turn, boost oil exports.
The oil market remains on edge, particularly due to the escalating crisis in the Middle East and the potential for it to spread beyond Israel and Gaza. This expansion could endanger crude flows from key oil-producing nations. Iran, a supporter of Hamas, has issued warnings that the war’s expansion is “approaching the inevitable stage.” The conflict has already had a significant impact on futures markets, causing disruptions in options pricing and a surge in freight costs.
Louise Dickson, an analyst at Rystad Energy, emphasized that the theme of the week is “de-escalation,” echoing sentiments from various political fronts, including Washington, Jerusalem, and Tehran. She underscored Iran’s pivotal role, highlighting that much depends on the actions taken by Iran in the coming days.
While global oil demand is experiencing robust growth, there is an excess supply in the market, despite production cuts by some OPEC+ members. Russell Hardy, CEO of Vitol SA, made this observation at the Energy Intelligence Forum in London, which faced disruptions due to protests.
As the situation in the Middle East unfolds and diplomatic efforts continue, the oil market remains sensitive to geopolitical developments, and global stakeholders are closely watching for any signs of de-escalation or potential disruptions in the energy sector.
*Please note that this article provides a snapshot of the oil market and diplomatic efforts at a specific point in time, and the situation may continue to evolve. For the latest updates, stay tuned to reputable news sources.*