Oil Prices Steady Amid Middle East Tensions
In the wake of the recent Israeli strike on Rafah in Gaza, West Texas Intermediate (WTI) crude oil prices have shown a slight increase, trading around $78.50 a barrel during Asian market hours on Tuesday. The attack, which involved both air and ground operations, targeted areas that have become a haven for over a million displaced Palestinians, according to a Reuters report.
As the ceasefire negotiations persist without reaching a resolution, the ongoing conflict continues to raise concerns over potential disruptions in the supply of crude oil from the volatile Middle East region. These geopolitical tensions are providing underlying support to oil prices, with markets wary of any further escalations that could impact global supply chains.
A recent Reuters poll revealed analyst expectations that U.S. crude and product stockpiles likely saw a decrease in the previous week. Estimates suggest a reduction of around 1.2 million barrels for the week ending May 3. The anticipation of tightening inventories further contributes to the cautious optimism supporting current oil price levels.
Amos Hochstein, the energy adviser to US President Joe Biden, reassured markets on Monday by stating that the United States has a sufficient supply of oil in its Strategic Petroleum Reserve (SPR) to address any concerns related to supply disruptions. Despite this, the SPR’s levels are nearing 40-year lows following the substantial release of 180 million barrels in response to Russia’s invasion of Ukraine in 2022.
The Biden administration has recently paused repurchasing oil for the reserve, as market prices have hovered above their target purchase price of $79.00 per barrel. This decision reflects a strategic approach to managing the nation’s oil reserves amid fluctuating market conditions and ongoing international tensions.
