Oil Prices Hold Steady Amid Middle East Tensions, Set for Weekly Gains

Oil prices remained relatively stable on Friday, showing resilience amid ongoing tensions in the Middle East, with both Brent and West Texas Intermediate (WTI) crude oils poised for weekly gains.

Brent crude oil, against which Nigerian oil is priced, experienced a slight decline of 6 cents or 0.1% to $81.57 per barrel while the U.S. WTI crude oil saw a marginal increase of 2 cents to settle at $76.24 per barrel.

The stability in oil prices comes against the backdrop of escalating tensions in the Middle East, particularly following Israel’s rejection of a ceasefire proposal from Hamas.

Israeli forces continued to engage in military action, bombing the southern border city of Rafah in response to ongoing conflicts in the Palestinian enclave.

The geopolitical uncertainties in the region have contributed to the buoyancy of oil prices, with both Brent and WTI crude set to register weekly gains of more than 5%.

Warren Patterson, the head of commodities research at ING, speaking on the recent price movements, said while tensions are driving the market, the fundamentals remain relatively unchanged.

He anticipates continued range-bound trading patterns, reflecting a balanced oil market.

U.S. officials have increasingly criticized Israel’s civilian casualties in Gaza, further intensifying the focus on the conflict.

Meanwhile, Hamas has engaged in ceasefire talks with mediators in Cairo, including representatives from Egypt and Qatar.

Despite the geopolitical tensions, there has been no significant impact on oil production. Non-OPEC output from countries like Norway and Guyana is on the rise, while Russia has exceeded its planned crude exports for February, despite facing challenges such as drone attacks and technical issues at refineries.

Furthermore, the U.S. Treasury Department’s sanctions on entities in the United Arab Emirates (UAE) and a Liberian-registered tanker have added another layer of complexity to the global oil market.

In addition to geopolitical factors, deflation risks in China, the world’s largest crude oil importer, have also influenced oil prices.

Concerns over China’s economic performance, exacerbated by a surprising Consumer Price Index (CPI) figure, have contributed to market uncertainty ahead of the Lunar New Year celebrations.

Overall, the stability in oil prices amid geopolitical tensions underscores the intricate dynamics shaping the global energy landscape.