Oil prices slightly increased on Wednesday due to uncertainty about the ongoing Middle East conflict. Brent crude oil futures went up by 19 cents (0.3%) to reach $74.44 per barrel, while U.S. West Texas Intermediate crude futures rose by 24 cents (0.3%) to $70.82 per barrel as of 0630 GMT. On Tuesday, oil prices dropped more than 4% to a near two-week low because of concerns about weakening demand and a report suggesting that Israel might not strike Iranian nuclear and oil sites. This eased fears of a supply disruption. However, worries about a potential escalation in the conflict between Israel and Iran-backed militant group Hezbollah persist.
The U.S. expressed opposition to the scope of Israel’s air strikes in Beirut over the past few weeks. Market strategist Yeap Jun Rong from IG suggested that following the recent price drop, there could be some room for prices to stabilize as market participants reassess geopolitical developments. He also mentioned that uncertainty over China’s fiscal policy may have an impact on oil demand outlook. China is reportedly planning to raise an additional 6 trillion yuan ($850 billion) from special treasury bonds over three years to boost its struggling economy, according to local media.
However, this news did not revive sentiment in the country’s stock market. Both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) have recently lowered their forecasts for global oil demand growth in 2024, with China accounting for the majority of the downgrades. Looking ahead, the market is waiting for the latest U.S. oil inventory data. The American Petroleum Institute’s weekly report is due later on Wednesday, and the Energy Information Administration data will be released on Thursday, a day later than usual due to a federal holiday.