Oil prices rose due to increasing attacks in the Middle East
On October 1, 2018, Saudi Aramco's Ras Tanura oil refinery and storage tanks and oil processing facilities at the terminal in Ras Tanura, Saudi Arabia became operational.
Simon Dawson | Bloomberg Getty Images
Oil prices rose on Wednesday on fears that the conflict in the Middle East could escalate into a wider war after Iran fired a ballistic missile at Israel, disrupting supplies from key producing regions.
Brent Futures rose 83 cents, or 1.13%, to $74.39 a barrel, while US West Texas Intermediate Crude It was up 88 cents, or 1.26%, at $70.71 by 0029 GMT, down slightly from spiking more than $1 earlier in the session.
During Tuesday's trading, both crude benchmarks jumped more than 5%.
Iran fired more than 180 ballistic missiles at Israel on Tuesday, Israel said, in retaliation for an Israeli operation against Tehran's Hezbollah allies in Lebanon.
Iran, a member of the Organization of the Petroleum Exporting Countries, is a major oil producer in the region.
“The direct involvement of Iran, an OPEC member, raises the possibility of oil supply disruptions,” ANZ Research said in a note referring to the conflict.
Iran's oil output hit a six-year high of 3.7 million barrels per day in August, ANZ added.
Israeli Prime Minister Benjamin Netanyahu promised Iran would pay for its missile strikes against Israel, while Tehran said any retaliation would cause “massive destruction”, raising fears of a wider war.
US President Joe Biden expressed full US support for Israel, its longtime ally and the UN Security Council for a meeting on the Middle East on Wednesday.
“A major escalation in Iran risks taking the U.S. to war,” Capital Economics said in a note. “Iran contributes about 4% of global oil production, but whether Saudi Arabia increases production will be an important consideration if Iranian supplies are disrupted.”
A panel of ministers from the Organization of the Petroleum Exporting Countries and allies, known collectively as OPEC+, meets later Wednesday to review the market, with no policy changes expected. From December, OPEC+, which includes Russia, is set to increase output by 180,000 barrels per month (bpd).
“Any suggestion of an increase in production could alleviate concerns about supply disruptions in the Middle East,” ANZ's note said.
US inventory data was mixed: Crude oil and distillate inventories fell last week while gasoline inventories rose, market sources said, citing data from the American Petroleum Institute on Tuesday.
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