Oil Prices increase marginally in early trade

7 May 2024 , 11:02 AM

After Israel attacked Rafah in Gaza, while talks for a truce with Hamas went on without result, oil prices increased somewhat early on Tuesday.

U.S. West Texas Intermediate (WTI) crude futures increased 46 cents, or 0.59%, to $78.94 per barrel, while Brent crude futures gained 46 cents, or 0.55%, to $83.79 per barrel.

Amidst the attention on disappointing U.S. jobs data and the potential timing of a Federal Reserve interest rate decrease, prices had moved higher on Monday, somewhat reversing the declines of the previous week, in which both contracts registered their worst weekly loss in three months.

While Israel stated the parameters did not match its demands, the militant Palestinian group Hamas on Monday accepted to the mediators’ proposal for a ceasefire in Gaza and proceeded with strikes in Rafah, intending to resume negotiations on the agreement.

Israeli forces launched air and ground strikes on Rafah, which is located on the southern border of Gaza, forcing its inhabitants to evacuate areas of the city that have served as a haven for over a million Palestinian refugees.

Prices have been sustained by the parties’ inability to reach a settlement in the seven-month-old conflict, as investors fear that a regional war expansion will affect Middle Eastern crude supplies.

In June, Riyadh signaled expectations of robust demand this summer by raising the official selling prices for the crude it shipped to Asia, Northwest Europe, and the Mediterranean. This move further bolstered prices.

The largest exporter in the world increased the price of its trademark Arab Light crude oil to Asia in June, pushing it above the Oman/Dubai average to $2.90 per barrel—the highest level since January and above traders’ expectations, according to a Reuters survey.

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