Middle East Tensions
MIDDLE EAST: On Friday, oil prices saw an increase as US Secretary of State Antony Blinken geared up to deescalate the Middle East Tensions while on the visit to the region. Brent crude futures rose by 0.57%, reaching $78.03 a barrel, and US West Texas Intermediate crude futures increased by 0.79%, reaching $72.76 at 1032 GMT. The WTI futures contract even surpassed the previous close by more than $1 at its intra-day peak.
Both benchmarks are poised to finish the first week of the year higher, nearly recovering losses from Thursday, following substantial US gasoline and distillate stock builds. The price rebound serves as a reminder of the risks associated with growing tensions in the Middle East, according to PVM analyst Tamas Varga.
Israeli forces plan a more targeted approach in the north and intensified pursuit of Hamas leaders in the south, as announced by the defense minister. Amid the ongoing threat of the conflict expanding, Blinken’s scheduled trip to the Middle East for a week of diplomacy reflects international efforts to address the situation.
Persisting tensions in the Middle East were noted, including Houthi rebels launching a sea drone in the Red Sea and a US airstrike in Baghdad.
Investors also monitored macroeconomic data for signals of potential interest rate cuts, which can stimulate economic growth and impact oil demand. Euro zone inflation rose in December, with the possibility of further increases in early 2024, potentially reducing pressure on the European Central Bank to cut rates.
The latest US Federal Reserve meeting suggested that inflation is under control, with growing concerns about the risks associated with an “overly restrictive” monetary policy for the economy. Investors are eagerly awaiting US payroll and unemployment data at 1330 GMT for additional insights.
