Brent Crude Falls Amid Middle East, Hurricane Tensions

By Adedapo Adesanya

The price of Brent crude depreciated to $86.56 per barrel on Tuesday after it earlier in the day rose by $87.46 per barrel, the highest level since April 30, as traders assessed the risk of war between Israel and Hezbollah while monitoring the potential threat of Hurricane Beryl to Gulf Coast refineries.

Also, the price of the US West Texas Intermediate (WTI) crude depreciated by 36 cents or 0.4 per cent to trade at $86.42 per barrel during the trading session.

Oil prices gained 6 per cent last month after sagging in May as geopolitical risk entered the market again. Eighteen Israeli soldiers were injured Sunday in a drone attack launched by the Iran-backed militia Hezbollah, according to the Israel Defense Forces.

Israel and Hezbollah have exchanged fire across the Lebanon border for months, but tensions have escalated in recent weeks as the two sides have threatened war.

An Israeli invasion of Lebanon to push back Hezbollah could lead to a confrontation with Iran, which is an oil producer in the Organisation of the Petroleum Exporting Countries (OPEC), analysts have warned.

Traders are concerned that a premature and aggressive hurricane season may cause disruptions to refineries and oil production in the US Gulf Coast. Hurricane Beryl, as it is called, has intensified to a Category 5 hurricane upon its arrival on Carriacou Island in Grenada.

Crude oil inventories in the United States fell by 9.163 million barrels for the week ending June 28, according to the American Petroleum Institute (API) compared to a 914,000-barrel build in crude inventories reported in the previous week.

Gasoline (petrol) inventories rose this week, by 2.468 million barrels, after last week’s 3.843-million-barrel increase. As of last week, gasoline inventories are on par with the five-year average for this time of year.

Official data from the US government will be released by the Energy Information Agency (EIA) later on Wednesday.

All 12 OPEC producers pumped 26.7 million barrels per day of crude oil in June, up by 70,000 barrels per day compared to May, according to a Reuters survey, which tracks supply to the market and is based on information provided by industry sources and shipping data.’

Nigeria increased its oil production by an estimated 50,000 barrels per day last month, as Africa’s top oil producer looks to raise output after years of underperforming in the OPEC+ deal, which led to the OPEC+ group cutting its quota at the end of last year.