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Oil Prices Stabilize After Recent Gains Amid Geopolitical Tensions

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File photo taken on March 12, 2019 shows operating oil pumps in Luling of Texas, the United States. U.S. oil prices turned negative on April 20, 2020. West Texas Intermediate crude for May delivery shed more than 300 percent to settle at -37.63 U.S. dollars per barrel on the New York Mercantile Exchange. (Xinhua/Wang Ying)
File photo taken on March 12, 2019 shows operating oil pumps in Luling of Texas, the United States. U.S. oil prices turned negative on April 20, 2020. West Texas Intermediate crude for May delivery shed more than 300 percent to settle at -37.63 U.S. dollars per barrel on the New York Mercantile Exchange. (Xinhua/Wang Ying)

Oil prices remained stable on Thursday following two consecutive days of gains.

 

The stability came as growing supply risks in the Middle East counterbalanced ongoing concerns about demand, which had earlier in the week driven prices to their lowest levels since early 2024.

 

By 1100 GMT, Brent crude futures were down 8 cents, or 0.1%, at $78.25 per barrel.

 

In contrast, U.S. West Texas Intermediate (WTI) crude saw a slight increase of 2 cents, or 0.03%, reaching $75.25 per barrel.

 

Brent crude rose 2.4% on Wednesday, while WTI gained 2.8%, marking the second consecutive day of recovery from Monday’s sharp decline.

 

On that day, Brent crude settled at its lowest price since early January, and WTI at its lowest since early February.

 

The price rebound was bolstered by a significant 3.7 million-barrel drop in U.S. crude inventories, which surpassed the anticipated 700,000-barrel decrease.

 

This decline marked the sixth consecutive weekly reduction, bringing inventories to six-month lows.

 

According to Panmure Liberum analyst Ashley Kelty, this data suggested stronger-than-expected demand and tighter physical markets.

 

Despite this, Kelty noted that crude markets still face challenges from weakened demand in China and the U.S. and the potential supply increase from the OPEC+ cartel starting in the fourth quarter.

 

Additionally, prices were supported by heightened tensions in the Middle East and the declaration of force majeure on production at Libya’s Sharara oilfield.

 

PVM analyst John Evans highlighted that the killing of senior members of militant groups Hamas and Hezbollah last week had increased the likelihood of retaliatory strikes by Iran against Israel, further straining the oil supply from this crucial region.

 

The National Oil Corporation of Libya announced on Tuesday that it had declared force majeure at the Sharara oilfield due to protests that had led to a gradual reduction in production.

 

Analysts at Citi forecasted a potential rise in oil prices to the low to mid-$80s per barrel for Brent.

 

They attributed this outlook to tight market balances through August, heightened geopolitical risks in North Africa and the Middle East, possible weather-related disruptions during hurricane season, and light managed money positioning.

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