Crude Oil Attempts to Break $71.50 Amid Market Concerns Over Lebanon Situation

Crude oil prices surged by more than 1% on Thursday as traders reacted to rising geopolitical tensions, particularly the escalating conflict between Israel and Iran.

The increase in oil prices came after Iran launched ballistic missiles into Israel in retaliation for an Israeli ground incursion into Lebanon. Markets remained on edge, with concerns growing over the potential for further escalation.

US Dollar Index Gains Momentum

In parallel, the US Dollar Index (DXY) marked its fourth consecutive day of gains. The index, which tracks the performance of the US dollar against a basket of six major currencies, is nearing its September high of 101.90. Traders are also closely watching upcoming economic data, including the Institute for Supply Management (ISM) services report and weekly jobless claims, ahead of Friday’s key Nonfarm Payrolls data release.

Despite the unexpected build-up in US crude oil inventories, reported on Wednesday by the Energy Information Administration (EIA), the market has largely ignored these figures due to the more pressing geopolitical concerns. The EIA reported a surprise inventory increase of 3.889 million barrels, compared to the expected drawdown of 1.25 million barrels.

Crude Oil Prices and Market Impact

At the time of writing, West Texas Intermediate (WTI) crude oil is trading at $71.47 per barrel, while Brent crude is priced at $75.34 per barrel. The market is grappling with uncertainty over whether the situation between Israel and Iran will lead to further escalation or if tensions may ease.

Key Market Movers and Developments:

• Libya’s National Oil Corporation announced that it has lifted the production halt on all its oil fields, according to a statement reported by Bloomberg.
• In Beirut, three large consecutive explosions were reported on Thursday, further heightening tensions in the region, according to independent sources cited by Reuters.
• OPEC took to Twitter to address a recent Wall Street Journal report that claimed Saudi Arabia anticipated oil prices could drop to $50 per barrel if OPEC members failed to maintain production cuts. OPEC stated that the report was “inaccurate and misleading.”
• Russia’s oil production in September slightly missed its OPEC+ targets, according to sources familiar with the data from the country’s Energy Ministry. Russia reportedly produced 8.97 million barrels per day in September.

Despite the geopolitical uncertainty and supply-side surprises, the market remains focused on the conflict between Israel and Iran as a major factor influencing crude oil prices.