Oil Soars as Mideast Tensions Flare, Manufacturing Booms

2 Apr 2024 , 10:53 AM

Early Asian trade on Tuesday saw a rise in oil prices, supported by indicators of stronger demand and growing tensions in the Middle East, which had earlier caused U.S. futures to spike to a five-month high.

June delivery Brent futures had increased 37 cents to $87.79 per barrel. U.S. West Texas Intermediate (WTI) oil futures for May saw a 32-cent increase to $84.03 per barrel.

For the first time in six months and one and a half years, respectively, manufacturing activity increased in China and the United States in March, which the markets took as a sign of increasing oil demand. The United States is the greatest user of crude oil in the world, while China is the top importer.

If U.S. futures breach a technical barrier level of $84.00 a barrel, they might surge as high as the mid-1990s, according to Sycamore. August 2022 was the last time the prompt-month WTI contract hit the $95 per barrel mark.

On Monday, the front-month contract reached its highest close since October 2023, at $83.71 per barrel.

Seven military advisors, including three senior commanders, were killed in an Israeli strike on Iran’s embassy in Syria. This marked a significant turn in the fight, which has been going on for almost six months, and raised concerns about more immediate effects on the oil supply.

The Joint Ministerial Monitoring Committee of the Organization of Petroleum Exporting Countries will convene virtually on Wednesday to discuss the state of the market and members’ execution of output reductions. Upholding their current supply policy, which calls for voluntary output reductions of 2.2 million barrels per day (bpd) through the end of the second quarter, is expected of members.

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