Oil prices rose on Wednesday after two straight days of losses, as a stalemate in Gaza ceasefire talks reignited uncertainty about supply security in the Middle East and offset a larger-than-expected rise in U.S. crude stocks.
Brent crude futures were up 25 cents at $89.67 a barrel at 06:50 GMT, while West Texas Intermediate (WTI) crude futures were up 24 cents at $85.47 a barrel.
Prices of both indicators fell around 1.7% at the end of last week, despite geopolitical tensions triggered in the Middle East by the possibility that Israel’s war in Gaza would last longer and draw in more countries.
Some of the heat has come out of the rally in crude oil in the early part of this week on hopes of a ceasefire in Gaza and higher US inventories
Hamas said on Tuesday that Israel’s proposal for a ceasefire in the war in Gaza did not meet its demands, but that it would examine the offer in more detail and convey its response to mediators.
If the conflict continues, there will be a risk of intervention by other countries in the region, especially Iran, which supports Hamas, OPEC’s third-largest producer.
Meanwhile, US crude stocks increased by 3.03 million barrels last week, according to figures from the American Petroleum Institute (API). Analysts had predicted inventories would increase by about 2.4 million barrels.
Official US government inventory data will be released at 14:30 GMT.
However, all risks are still to the upside.
Everything from a cooler-than-expected US CPI tonight to another Ukrainian drone attack on Russia’s oil infrastructure to Iran’s response after Israel killed two of its generals in Syria last week has the potential to reignite the uptrend.
Separately, the government raised its forecast for US crude oil production, expecting it to rise by 280,000 barrels per day to 13.21 million barrels per day in 2024, up 20,000 barrels from the US Energy Information Administration’s (EIA) previous estimate.
But the EIA said it expects Brent crude oil prices to average $88.55 per barrel in 2024; This was above the previous estimate of $87 per barrel.
On Tuesday, both Brent and WTI had fallen more than 1% as Israel-Hamas ceasefire talks continued in Cairo.
The commander of the Revolutionary Guard navy in Iran said that the Strait of Hormuz could be closed if necessary. Approximately one-fifth of the world’s total oil consumption passes through the Strait of Hormuz on a daily basis.
Türkiye announced that it would restrict the export of various products, including jet fuel, to Israel until a ceasefire is reached. Israel said it would respond with its own restrictions.
