Brent Crude Nears $84 on Middle East Supply Concerns

February 20, 2024
crude oil market

By Adedapo Adesanya 

The price of the Brent crude oil graded neared $84 per barrel on Monday after it gained 9 cents to sell at $83.56 per barrel, as lingering supply concerns from tensions in the Middle East were offset by signs of weakening demand.

However, it was a different outcome for the US West Texas Intermediate (WTI) crude which had no settlement due to the Presidents’ Day holiday in the country.

The conflict in the Middle East continued over the weekend as Israeli raids put the Gaza Strip’s second-largest hospital out of service as Israel prepared for an assault on the southernmost city of Rafah, which houses more than a million mostly displaced Palestinians living in desperate conditions.

The Gaza war began when Hamas, which controls Gaza, sent fighters into Israel on October 7, killing over 1,000 people, mostly civilians, and seized over 250 hostages.

Now, more than four months later, the conflict has destabilised the entire Middle East as Hamas’s military allies – all Iran-backed paramilitary groups – have targeted Israeli and US interests with missiles and drones.

Although this has not directly affected oil supplies, it has affected the wider trade.

Also, efforts by the US and UK including carrying out hundreds of attacks on the country in an attempt to neutralize rebels have not yielded a positive result, it has only seen continued missile and drone attacks on the international shipping lane.

For instance, on Monday, missiles from the Houthi rebels hit a commercial vessel and forced the crew to evacuate. This is the first instance the crew of a commercial vessel has been forced to evacuate due to damage sustained by rebel attacks.

Worries came from slowing demand forecasts from the International Energy Agency and an increase to producer prices in January, amplifying inflation concerns and lifting the US Dollar.

The Dollar index, which tracks the currency against six peers, has gained for five straight weeks and edged slightly higher on Monday.

A stronger greenback makes dollar-denominated oil less attractive to investors holding other currencies, denting demand.

Market analysts say the impact of the Dollar has been offsetting supportive measures such as the Middle East situation, interventions from the Organisation of the Petroleum Exporting Countries (OPEC), and hopes in China’s economic conditions.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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