Oil Prices Rise as U.S. Secretary of State Visits Middle East to Address Israel-Gaza Conflict
Oil prices experienced gains on Friday as U.S. Secretary of State Antony Blinken prepared to visit the Middle East in an effort to prevent the Israel-Gaza conflict from escalating further. Brent crude futures saw an increase of 44 cents, or 0.57 percent, reaching $78.03 per barrel, while U.S. West Texas Intermediate crude futures rose by 57 cents, or 0.79 percent, to $72.76 at 1032 GMT.
During intra-day trading, the WTI futures contract surpassed the previous close by over $1. Both benchmarks are expected to end the first week of the year on a positive note, having nearly recovered from Thursday’s losses following significant builds in U.S. gasoline and distillate stocks.
The rebound in oil prices serves as a reminder of the risks associated with the growing tensions in the Middle East, according to PVM analyst Tamas Varga.
In response to the conflict, Israeli forces have announced plans for a more targeted approach in the north and increased pursuit of Hamas leaders in the south, as stated by the country’s defense minister on Thursday.
As Blinken’s visit aims to prevent the conflict from expanding, the threat of further escalation remains. The State Department has confirmed that Blinken will engage in a week of diplomacy in the Middle East.
The situation in the Middle East continues to be tense, with Houthi rebels launching a sea drone in the Red Sea and a U.S. airstrike occurring in Baghdad, according to a report by ING analysts.
Investors are also closely monitoring macroeconomic data for any indications of potential interest rate cuts. Lower borrowing costs can stimulate economic growth and lead to increased oil demand.
Eurozone inflation has risen in December and is expected to continue increasing in early 2024. This could alleviate pressure on the European Central Bank to implement rate cuts.
The latest U.S. Federal Reserve meeting on Thursday suggested that inflation is under control, but there are growing concerns about the potential risks associated with an “overly restrictive” monetary policy.
Investors are eagerly awaiting U.S. payroll and unemployment data, which will be released at 1330 GMT.
By Robert Harvey
