LONDON: Oil prices saw a modest increase on Friday, driven by the potential for renewed supply risks as Israel and Hezbollah exchanged accusations of ceasefire breaches. Additionally, the postponement of an OPEC+ meeting left market participants in suspense over the group's output strategy.
Brent crude futures climbed by 10 cents, or 0.1 percent, reaching $73.38 per barrel at 8:16 a.m. Saudi time. Meanwhile, US West Texas Intermediate crude futures stood at $69.17, reflecting a 45-cent, or 0.7 percent, rise compared to Wednesday's closing price.
On a weekly basis, Brent futures declined by 2.4 percent, while the US WTI benchmark saw a 2.9 percent drop. Trading volumes remained low due to the Thanksgiving holiday in the US, which closed financial markets on Thursday.
Israel and the Lebanese armed group Hezbollah accused each other on Thursday of violating their ceasefire, which had initially eased concerns about supply disruptions from a broader conflict. However, oil supplies from the Middle East have remained largely unaffected by Israel's ongoing conflicts with Hezbollah in Lebanon and Hamas in Gaza.
The OPEC+ alliance, comprising the Organization of the Petroleum Exporting Countries and Russia, postponed its policy meeting to December 5 from December 1 to avoid scheduling conflicts. The group is anticipated to extend its production cuts during the rescheduled meeting.
BMI, a subsidiary of Fitch Solutions, revised its Brent price forecast downward on Friday to $76 per barrel in 2025, from $78 previously, citing a "bearish fundamental outlook, persistent weakness in oil market sentiment, and the downward pressure on prices expected under Trump."
"Although we anticipate that the OPEC+ group will choose to extend the current cuts into the new year, this will not be enough to fully eliminate the production surplus we foresee for next year," BMI analysts noted in a report.
On Thursday, Russia launched another attack on Ukrainian energy facilities, raising concerns about potential retaliatory actions that could impact Russian oil supply. Additionally, Iran informed a UN nuclear watchdog that it plans to install over 6,000 additional uranium-enriching centrifuges at its enrichment plants, according to a confidential report.
Goldman Sachs analysts predict that Iranian supply could decrease by up to 1 million barrels per day in the first half of next year if Western powers intensify sanctions enforcement on its crude oil output.
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