Oil prices rose after falling on Wednesday, as traders assessed tensions in the Middle East and the outlook for market balances through 2025.
Brent crude was trading at around $76 a barrel, while West Texas Intermediate crude was trading near $72. In the Middle East, US Secretary of State Antony Blinken held talks with Saudi Crown Prince Mohammed bin Salman in Riyadh on efforts to reach a ceasefire in Gaza and Lebanon. Blinken had earlier visited Israel, where the Jewish state has vowed to retaliate against Tehran over a rocket attack earlier this month.
Oil prices have been volatile this month as traders weigh supply risks in the Middle East, which pumps about a third of global supplies, and a mixed picture on demand. While crude consumption in top importer China has fallen even as authorities add stimulus, there have been stronger signals from the United States, where refineries are running at their highest processing rates in six years. Investors are also eyeing next month’s tight U.S. elections.
“Middle East tensions and the economic outlook — as a proxy for global oil demand — are the main drivers,” said Vandana Hari, founder of Vanda Insights in Singapore. “Neither of these are showing strong signs at the moment, and crude may continue to move in a broad range until that changes.”
In order to protect themselves from the risk of a potential price spike caused by supply disruptions in the Middle East, traders are holding a record number of options contracts. This week, open Brent options contracts topped 4 million contracts for the first time, equivalent to 4 billion barrels.
Crude’s surprise midweek drop — when Brent closed down more than 1% — came after data showed U.S. oil inventories rose by more than 5 million barrels. Rising U.S. production is expected to create a surplus in 2025, while OPEC+ spare capacity is near record levels, according to the International Energy Agency.
