By Adedapo Adesanya
Crude prices jumped more than 3 per cent on Thursday following increased fuel demand in the United States due to Hurricane Milton and Middle East supply risks.
Brent futures rose by $2.82 or 3.7 per cent to settle at $79.40 a barrel, and the US West Texas Intermediate (WTI) crude increased by $2.61 or 3.6 per cent to close at $75.85.
In the US, the world’s largest oil producer and consumer, Hurricane Milton went across Florida, where about a considerable number of fuel stations sold out of petrol after the storm also knocked out power to more than 3.4 million homes and businesses.
Market analysts noted that the closures of several product terminals, delayed tanker truck deliveries and disrupted pipeline movement will likely be affecting supplies well into next week given broad-based power outages.
This will serve as positive news for the market as disruptions generally lend support.
Recall that crude benchmarks spiked earlier this month after Iran launched more than 180 missiles against Israel on October 1.
This raised the prospect of retaliation against Iranian oil facilities. Iran is backing several groups fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen.
However, since Israel has yet to respond, crude benchmarks have eased.
Despite this, investors remained wary, given that Israel has vowed to wait and strike at the best time.
Iran is a member of the Organisation of the Petroleum Exporting Countries (OPEC) and produced about 4.0 million barrels per day of fuel in 2023, any disruption to its oil facilities will support prices.
Israel has continued to fight in Lebanon as Reuters reported that a strike in central Beirut on Thursday night killed 11 people and wounded at least 48.
In Yemen, the Houthis said they targeted vessels in the Red Sea and Indian Ocean.
The Houthis have launched attacks on international shipping near Yemen since last November in solidarity with the Palestinians in the war between Israel and Hamas in the Gaza Strip.
Meanwhile, Gulf states are lobbying the US to stop Israel from attacking Iran’s oil sites because they are concerned their oil facilities could come under fire from Iran’s allies if the conflict escalates.
Support came as investors expressed confidence that the Federal Reserve would cut interest rates in November after data showed an increase in weekly jobless claims and an annual rise in inflation that was the lowest since February 2021.
The US central bank started to lower interest rates in September after hiking rates aggressively in 2022 and 2023.
Lower interest rates decrease borrowing costs for consumers and businesses, which can increase economic growth and demand for oil.
Modupe Gbadeyanka