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WILMINGTON, DELAWARE – NOVEMBER 05: Democratic presidential nominee Joe Biden speaks while flanked by vice presidential nominee, Sen. Kamala Harris (D-CA), at The Queen theater on November 05, 2020 in Wilmington, Delaware. Biden attended internal meetings with staff as votes are still being counted in his tight race against incumbent U.S. President Donald Trump which remains too close to call. (Photo by Drew Angerer/Getty Images)
Ahead of the United States (US) President, Joe Biden’s visits to the Middle East, there are reports that oil prices have begun to rise from Tuesday, October 17.
Biden’s itinerary is expected to involve striking a balance between supporting Israel and attempting to stop any regional escalation of its conflict with Hamas.
Brent futures increased $0.74 to $90.39 a barrel at 10:40 a.m. (1440 GMT) on Monday after falling more than $1 on Monday. WTI (U.S. West Texas Intermediate) crude increased by $0.69 to $87.35.
Both oil benchmarks saw significant rises last week due to concerns that the Middle East conflict may worsen. The global benchmark Brent saw a 7.5% weekly gain, the most since February.
After OPEC member Iran promised “pre-emptive action” from the “resistance front” of its allies, which includes the Hezbollah movement in Lebanon, Biden’s visit to Israel on Wednesday will aim to strike a balance between demonstrating support for Israel’s war on Hamas and trying to rally Arab states to help prevent a regional conflict.
According to Edward Moya, senior market analyst at OANDA, “oil prices are wavering as energy traders await to see if U.S. diplomatic efforts will be successful in preventing the Israel-Hamas conflict from turning into a wider regional war.”
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“The crude demand outlook also got a small boost after the latest round of U.S. economic data showed that the consumer is still healthy and that industrial production is tentatively picking up,” he said.
Elsewhere, Venezuela’s government and opposition are set to resume long-suspended talks on Tuesday, which could lead to Washington easing sanctions, multiple sources said.
Since 2019, the U.S. has imposed sanctions on oil exports from Venezuela, a member of the Organization of Petroleum Exporting Countries (OPEC), to punish President Nicolas Maduro’s government following elections in 2018 that Washington considered a sham.
The U.S. government has been seeking ways to increase the flow of oil to world markets to alleviate high prices. But any real oil output increase by Venezuela will take time because of a lack of investment.
“The market is really tight right now and that’s why we’re so nervous,” Phil Flynn, an analyst at Price Futures Group, said.
The CEO of Saudi Arabia’s Saudi Aramco said on Tuesday the company could ramp up oil production within weeks if needed, as global consumption is set to reach a record level by year-end.
OPEC+, which comprises OPEC countries and leading allies including Russia, has cut output since last year in what it says is pre-emptive action to maintain market stability.
Looking ahead, the oil market is waiting for U.S. oil inventory data from the American Petroleum Institute (API), an industry group, on Tuesday and the government’s Energy Information Administration (EIA) on Wednesday. (Reporting by Nicole Jao in New York; Additional reporting by Paul Carsten in London and Sudarshan Varadhan in Singapore; Editing by Kim Coghill, Ed Osmond, Jan Harvey and Barbara Lewis)
