Oil prices rise due to violation of truce between Israel and Hezbollah
29 November 10:26
Oil prices rose slightly on Friday due to potential renewed supply risks as Israel and Hezbollah exchanged accusations of ceasefire violations. Another reason was the postponement of the OPEC meeting, which left investors expecting some new decision on production policy, Komersant ukrainskyi reports citing Reuters.
Brent crude futures rose 10 cents, or 0.1%, to $73.38 per barrel as of 7 a.m. Kyiv time. Futures for US West Texas Intermediate crude were at $69.17, up 45 cents, or 0.7%, from Wednesday’s close.
On a weekly basis, Brent futures fell by 2.4%, while the US benchmark WTI was trading 2.9% lower. Trading remained low due to the Thanksgiving holiday on Thursday, when US financial markets were closed.
Reasons for the rise in price
Israel and the Lebanese armed group Hezbollah on Thursday exchanged accusations over alleged violations of a truce that came into effect a day earlier. Initially, the deal seemed to reduce the potential risk of supply disruption due to the conflict, which had previously led to a risk premium.
However, oil supplies from the Middle East have remained largely unaffected by Israel’s parallel conflicts with Hezbollah in Lebanon and Hamas in Gaza.
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OPEC, the Organization of the Petroleum Exporting Countries, and its allies, including Russia, have postponed their next policy meeting from December 1 to December 5 due to a scheduling conflict. It is expected that at the meeting, OPEC will continue to cut production.
Forecasts and expectations
BMI, a unit of Fitch Solutions, on Friday lowered its Brent price forecast to $76 per barrel in 2025 from the previous $78, citing “bearish fundamental outlook, continued weakness in oil market sentiment, and downward pressure we expect under Trump.”
“While we expect the OPEC group to decide to extend existing cuts into the new year, this will not be enough to fully eliminate the oversupply we forecast,”
– bMI analysts said in a note.
Also on Thursday, Russia struck Ukrainian energy facilities for the second time this month. ANZ analysts said the attack risks triggering retaliation that could affect Russian oil supplies.
Iran has told UN nuclear monitors that it will install more than 6,000 additional uranium enrichment centrifuges at its enrichment plants, according to a confidential report by the monitors on Thursday.
Analysts at Goldman Sachs said Iran’s supply could be cut by up to 1 million barrels a day in the first half of next year if Western powers tighten sanctions on crude oil production.
