Oil prices continued their upward trajectory for a third consecutive day, as escalating tensions in the Middle East overshadowed fears of a global supply glut. The global crude benchmark, Brent, surged above $71 per barrel, marking a 1.7% rise over the last two trading sessions. Meanwhile, West Texas Intermediate (WTI) was on the verge of hitting $68 per barrel.
The increase came after Israel launched a series of military strikes across Gaza, signaling a rapid breakdown of the nearly two-month-old ceasefire with Hamas. This raised concerns about further instability in the region.
On the international front, U.S. President Donald Trump warned that any attacks on shipping by Yemen’s Houthi rebels would be seen as direct provocations by Iran. This statement came as the U.S. military intensified its actions against the rebels, and the Trump administration had already increased sanctions against Iran in an effort to curb its influence in the region.
Despite the recent rally in oil prices, crude remains on track for a quarterly loss, driven by a combination of bearish market forces. A global trade war, which threatens to reduce demand, coupled with an increase in oil production by OPEC and its allies starting in April, are contributing to an expected supply glut. This scenario is further exacerbated by the International Energy Agency’s projection of a global oversupply.
Analysts at ANZ Group Holdings Ltd. predict that potential losses in global crude supply due to U.S. sanctions on Iran could reach 1 million barrels per day. This reduction could partially offset production increases from OPEC as it phases out voluntary cuts.
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