Oil was volatile on Friday as prices rose on renewed concerns over supply risks after Israel and Hezbollah traded accusations of ceasefire violations.
At the time of writing, the price of West Texas Intermediate crude oil was $69.28 per barrel, up 0.8% from the previous close.
Brent crude on the Intercontinental Exchange was $72.99 per barrel, up 0.3%.
Israel and Lebanon-based Hezbollah had agreed to a ceasefire deal on Wednesday, which was brokered by US President Joe Biden.
The deal was intended to allow people in both Israel and Lebanon to return to their homes in the border regions, which have been plagued by 14 months of fighting.
According to a Reuters report, Israel’s military said the ceasefire was violated when it suspected suspects, some in vehicles, arrived at several locations in the southern zone.
The Middle East is home to more than half of the world’s oil reserves. Escalating tensions could impact supply in the region, boosting oil prices.
However, since the conflict between Israel and Hamas broke out last year, supplies have not been affected from the region so far.
Focus on geopolitics
Meanwhile, on Thursday, Russia targeted Ukrainian energy facilities for the second time in November.
A retaliation by Ukraine could affect Russian oil supply. Russia remains one of the top oil exporters despite tough sanctions on its shipments by western powers.
Iran told a United Nations nuclear watchdog that it would install more than 6,000 additional uranium-enriching centrifuges at its enrichment plants, Reuters reported.
Analysts at Goldman Sachs have estimated that Iranian oil supply could drop by 1 million barrels per day next year if the US and other western powers tighten sanction enforcements.
US President-elect Donald Trump is expected to tighten enforcement of sanctions on Iran’s oil exports.
Under Biden, the US administration did not pursue tighter enforcements, which led to a spike in Iranian oil exports.
Most of Iran’s oil exports are gobbled by China. According to Vortexa, oil exports to China have risen 30% on a year-on-year basis till the first 10 months this year.
OPEC+ postpones meeting
The oil market was left in an uncertain state after the Organization of the Petroleum Exporting Countries and allies moved their Sunday meeting to December 5.
OPEC said in an official release that the meeting has been rescheduled as several ministers will be attending the 45th Gulf Summit in Kuwait City in Kuwait.
The meeting will be held via video conference, OPEC said.
Arslan Ali, derivatives analyst at FXempire.com, said in a report:
Market sentiment was further clouded by OPEC+ delaying its key policy meeting to December 5, leaving investors uncertain about future output strategies.
Thin trading volumes, attributed to the US.
Thanksgiving holiday, underscored a cautious market tone.
The cartel was expected to take a decision on its oil output policy from January as the steep voluntary cuts of 2.2 million barrels per day are set to expire at the end of December.
OPEC was scheduled to increase output by 180,000 barrels per day from December and unwind some of its voluntary production cuts.
But, lower oil prices and concerns over oversupply prompted them to extend the cuts till December-end.
Azerbaijan Energy Minister Parviz Shahbazov confirmed as much, stating that “OPEC+ could or couldn’t discuss oil output rollover at its next meeting. It is difficult to prejudge”
Brent crude forecast
The support for Brent crude oil prices is at $70 per barrel. On the upside, a long term resistance remained at $80 a barrel.
“That’s assuming that we would even get anywhere near there,” Christopher Lewis, analyst at FXempire, said in a note.
“I think the $75 level is probably going to be difficult to break above. And at this point in time, I think that’s your first real challenge,” he added.
If you’re a short-term trader, this might be the market for you if you like trading range-bound markets.
There’s really nothing to get the markets moving at the moment, but it is worth noting that the support in both grades (Brent and WTI) of crude oil go back a couple of years.
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