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Oil Climbs For Third Day As Middle East Tensions Escalate

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Synopsis:

Oil prices rose for the third day as Middle East tensions escalated. Brent oil reached $74.55 per barrel, up 0.9%, while WTI gained 1%. Traders fear disruptions to global oil supply routes.

Oil prices news today

Oil prices continued to climb for the third consecutive day, driven by increasing supply risks from the Middle East. Brent crude oil reached $74.55 a barrel, a 0.9% increase, while West Texas Intermediate (WTI) rose 1% to $70.80. The ongoing conflict between Israel and Iran has intensified, raising concerns over potential disruptions to oil supply routes in the region, which accounts for approximately one-third of global oil production.

OIL INDIA LTD

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454.35-11.85 (-2.54 %)

Updated - 13 December 2024
471.40day high
DAY HIGH
451.10day low
DAY LOW
2862359
VOLUME (BSE)

Middle East tensions heighten supply concerns

Traders have been closely monitoring the escalating conflict, particularly the threat of Israeli retaliatory strikes on Iran. A major attack on Iran’s oil-exporting capacity could remove up to 1.5 million barrels per day from the market, severely impacting global oil supplies. Even a minor strike on downstream assets could lead to a reduction of 300,000 to 450,000 barrels per day. These potential disruptions have led to a surge in oil prices, reflecting the market's sensitivity to geopolitical risks.

Volatility surges as prices rise

As oil prices rose, volatility in the market surged to its highest level in nearly a year. Brent’s implied volatility index spiked, while options markets took on a more bullish stance. The balance between calls, which profit when prices increase, and puts has shifted in favour of the former, signalling traders' anticipation of further price rises. The Brent oil share price remains under close scrutiny as tensions continue to simmer in the Middle East.

Global supply and OPEC+ response

Despite the current spike in prices, there are indications of adequate global supplies in the near future. OPEC+ has announced plans to gradually restore some of its production capacity, with increases scheduled from December following a two-month delay. In addition, US crude inventories unexpectedly rose by 3.9 million barrels last week, the largest increase in five months, indicating that short-term supplies may remain stable despite the geopolitical risks.

As supply concerns dominate the market, Brent oil share price continues to reflect the uncertainty surrounding future production levels in the Middle East. With volatility expected to persist, traders remain focused on developments in the region.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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