Oil prices rise by 1% due to Middle East crisis but still experience a weekly loss due to weak demand forecast; Brent reaches $90 per barrel

Oil prices experienced a slight uptick on Friday, with Brent crude settling at $90.45 per barrel and WTI crude at $85.66. Despite this, Brent saw a 0.8% decline for the week, while WTI dropped over 1%. Domestically, crude oil futures settled slightly higher at ₹7,190 on the multi commodity exchange after hitting an intra-day high of ₹7,322.

The recent fluctuations in crude oil prices are being largely influenced by conflicting forecasts from the International Energy Agency (IEA) and the Organisation of Petroleum Exporting Countries (OPEC). The IEA has reduced its 2024 world oil demand growth forecast to 1.2 million barrels per day, while OPEC projects an increase of 2.25 million barrels per day. Analysts note that the market is currently leaning towards OPEC’s demand expectations.

Concerns over potential retaliation from Iran, the third-largest OPEC producer, following an incident involving Israel have also impacted oil prices. The fear of supply disruption in the Middle East is contributing to the current market fluctuations. Additionally, supply chain issues, including Iran’s threat to shut the Suez Canal, are adding a risk premium to oil prices.

Looking ahead, analysts project that geopolitical tensions, especially those involving Iran and Israel, could continue to influence crude oil prices. The ongoing supply constraints from OPEC+ output cuts further compound the market’s uncertainty. Support for crude oil prices is expected around $84.50-$83.90, while resistance could be seen at $85.90-$86.60. In Indian Rupees, support lies at Rs7,020-6,930, with resistance at Rs7,190-7,280.

As the market remains sensitive to geopolitical developments and supply chain concerns, investors are advised to tread cautiously and seek guidance from certified experts before making investment decisions.