Oil prices rose on Tuesday, with analysts saying that uncertainty would keep prices elevated, even as there were no concrete signs of any production losses stemming from the Iran-Israel conflict for now.
Brent crude futures climbed 54 cents, or 0.7%, to $73.77 a barrel as of 0730 GMT. U.S. West Texas Intermediate crude was up 58 cents, or 0.8%, at $72.35. Both contracts rose more than 2% earlier in the trading session but also notched declines before bouncing back in volatile trading.
Prices traded higher as there was still risk of further unrest and potential disruption of oil supply from the key Middle East producing region.
However, there were no visible signs of supply loss for now, industry sources said.
The Israel-Iran conflict has not led to a loss in oil production, and the Organization of the Petroleum Exporting Countries still has spare production capacity, the chief executive of Italy’s Eni said on Tuesday.
Meanwhile, all the facilities of energy services firm Baker Hughes are operating normally in the Middle East, its chief executive Lorenzo Simonelli told Reuters on Monday.
The benchmark oil contracts settled more than 1% lower on Monday amid hopes that the conflict would ease after media reports Iran was seeking an end to hostilities.
However, concerns remained as U.S. President Donald Trump in a social media post urged “everyone” to evacuate the Iranian capital of Tehran.
Entering its fifth day on Tuesday, the fighting has continued with Iranian media reporting explosions and heavy air defence fire in Tehran. In Israel, air raid sirens sounded in Tel Aviv in response to Iranian missiles.
“The conflict between Iran and Israel is still fresh and brewing, and investor sentiments may still be holding on to the ‘war risks’,” Priyanka Sachdeva, senior market analyst at Phillip Nova, said in an email.
“Added volatility and caution ahead of the Fed policy decision are further ensuring higher-paced price reactions in oil,” Sachdeva added, referring to the U.S. Federal Open Market Committee meeting, which guides interest rate decisions, that begins on Tuesday.
Iran is the third-largest producer among members of the Organization of the Petroleum Exporting Countries. The concern is the fighting could disrupt its oil supply and raise prices, or Iran could retaliate by blocking shipping through the Strait of Hormuz.
U.S. media on Monday night reported Trump was proposing renewed talks with Iran on a nuclear deal, even as shipping sources said a vessel collided with two other ships sailing near the Strait of Hormuz, highlighting risks to companies moving oil and fuel supplies in the region.
Source: Reuters