(London) Oil prices held steady on Friday, consolidating their gains for the week, as investors carefully monitored geopolitical risk in the Middle East after crude stocks fell in the United States.
At around 5:45 a.m. ET, the price of a barrel of North Sea Brent crude for delivery in August was down 0.08% at $85.64.
Its American equivalent, the barrel of West Texas Intermediate (WTI), for delivery the same month, which is the first day of use as a reference contract, lost 0.04% to 81.26 dollars.
Both global benchmarks are holding steady and Brent remains “above the $85 level, poised to close the week with a gain of more than 3%,” commented Ricardo Evangelista, analyst at ActivTrades.
The Israeli army and Hezbollah exchanged new cross-border fire during the night from Thursday to Friday after an escalation in bellicose rhetoric between the two protagonists, raising fears of an extension of the war.
“The entire region could soon be drawn into a conflict that could disrupt one of the main production areas on the planet,” recalls Mr. Evangelista, even if for the moment the supply of crude oil is not affected.
If supply remains monitored by investors, questions about demand seem more “important and have a greater influence on prices”, notes Ole Hvalbye, analyst at SEB.
The day before, the US Energy Information Administration (EIA) announced a contraction in commercial crude oil inventories of 2.5 million barrels last week in the United States.
“We note that the upward trend in global oil stocks has stopped,” emphasize DNB analysts.
At the same time, the European Union approved on Thursday a new “substantial” package of sanctions against Russia, at war with Ukraine.
Included is a ban on the transshipment of liquefied natural gas (LNG) in the European Union, according to the document listing these sanctions.
“Given that only re-exports to third countries are affected by the sanctions, and not imports into the EU in general, the consequences on the market should be limited”, as these new sanctions do not reduce the volumes of natural gas supplied to the EU, explained Carsten Fritsch, analyst at Commerzbank.
These new sanctions also aim to limit Russia’s use of “ghost” cargo ships to circumvent EU sanctions on Russian oil exports.
