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Oil prices edged up slightly in early Asian trading on Friday, maintaining their strong weekly gains. Investors remain cautious as tensions in the Middle East raise concerns over potential crude flow disruptions, despite the global oil market being well-supplied.
Market Update: Oil Prices Inch Up
- Brent crude futures rose by 9 cents, or 0.12%, reaching $77.71 per barrel at 0010 GMT.
- West Texas Intermediate (WTI) crude futures climbed 8 cents, or 0.11%, to $73.79 per barrel.
Both benchmarks are on track for an approximate 8% increase for the week, reflecting a significant upward trend in oil prices.
Middle East Conflict and Potential Oil Disruptions
U.S. President Joe Biden’s comments on Thursday about potential U.S. strikes on Iran’s oil facilities, in response to Tehran’s missile attacks on Israel, have sparked concerns over supply disruptions. The heightened tensions contributed to a 5% rally in oil prices earlier this week.
Daniel Hynes, an analyst at ANZ, noted that the market is beginning to factor in possible supply disruptions from the Middle East, which accounts for about a third of the world’s oil supply. The move has also been supported by bearish investors retracting bets on lower prices, with the potential for further price hikes if bullish positions gain momentum.
Supply Fears Tempered by OPEC’s Spare Capacity
Despite concerns, the global crude supply remains unaffected by the Middle East unrest. OPEC’s spare production capacity provides some relief, ensuring that any disruption can be balanced. Additionally, Libya’s recent resolution of internal disputes has led to the reopening of its oilfields and export terminals, further stabilizing supply.
Libya and Iran, both members of OPEC, play crucial roles in the oil market. Iran, despite operating under U.S. sanctions, produced about 4 million barrels per day (bpd) in 2023, while Libya produced approximately 1.3 million bpd last year, according to the U.S. Energy Information Administration (EIA).
