Oil prices rose at the end of trading Tuesday (Wednesday morning WIB), triggered by increasing tensions in the Middle East.
Brent crude oil futures rose 2.07 US dollars, or 2.3 percent, to 91.97 US dollars per barrel at 0225 GMT.
Meanwhile, US West Texas Intermediate (WTI) crude oil futures increased 2.26 US dollars, or 2.6 percent, to 88.92 US dollars per barrel.
Tensions in the Middle East rose after hundreds of citizens were killed in an explosion at a hospital in Gaza, sparking concerns about potential supply disruptions from the region.
The market is calculating the risk after 500 Palestinians died as a result of the explosion that occurred on Tuesday (17/10).
Jordan then canceled a planned summit with US President Joe Biden and Egyptian and Palestinian leaders.
“The cancellation of the summit between Biden and Arab leaders reduces the possibility of a diplomatic solution to the Israeli Hamas conflict,” said Commonwealth Bank of Australia analyst Vivek Dhar.
The market is concerned about the threat of an Israeli ground attack on Gaza.”A prolonged occupation would be a scenario that would push the price of Brent oil above 100 US dollars per barrel, increasing the risk of the Israeli-Hamas conflict expanding and potentially attracting Iran directly,” said Dhar.
Biden is scheduled to visit Israel on Wednesday to show support for the country in its war against Hamas.He will explain that he does not want the conflict to spread.
Meanwhile, US crude oil stocks fell by around 4.4 million barrels in the week ended October 13, according to market sources citing American Petroleum Institute figures on Tuesday (17/10), also supporting the rise in oil prices.
The decline was much larger than the 300,000 barrel drop that analysts expected.
Official data from the US government will be released on Wednesday.
On the demand side, China’s economy grew faster than in the third quarter, according to official data on Wednesday.
That suggests the recent recovery may be enough to hit Beijing’s year-long growth target.Meanwhile, retail sales in the US increased more than expected in September, boosting expectations of an interest rate hike by the Federal Reserve at the end of the year.
Rising interest rates to control inflation could slow economic growth and reduce oil demand.
On the other hand, the Venezuelan government and its political opposition on Tuesday (17/10) agreed to an electoral guarantee for the 2024 presidential election, paving the way for possible relief from US sanctions that could increase oil supplies.
The US has imposed sanctions on oil exports from Venezuela since 2019, and although US sanctions relief is expected to increase the flow of oil supplies, analysts expect any increase from the country will take a long time due to a lack of investment.