Oil Holds Steady Amid Ongoing Middle East Tensions and Supply Concerns

Oil prices remained steady on Wednesday, supported by ongoing uncertainty surrounding the Middle East conflict and production cuts from OPEC+. This balance comes despite projections for ample global supply next year, which put some downward pressure on the market.

On Tuesday, oil prices dropped more than 4% to reach a near two-week low following reports that Israel would refrain from attacking Iran’s nuclear and oil facilities. This reduced concerns about disruptions to oil supply from the region. However, by Wednesday, Brent crude futures edged up 16 cents, or 0.2%, to $74.41 a barrel, while U.S. West Texas Intermediate (WTI) slipped 19 cents, or 0.3%, to $70.39 a barrel by 0930 GMT.

Middle East Risks Linger as OPEC+ Cuts Remain

The potential for further conflict between Israel and Hezbollah, supported by Iran, remains a key concern for markets, which has led to some stabilization in prices. In the meantime, OPEC+ supply cuts, which are set to continue until December, are also providing some support. Analysts are still cautious, noting that geopolitical tensions have not fully subsided.

Looking forward, experts expect a global oil surplus by 2025, which could weigh on prices. Additionally, both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) revised down their forecasts for 2024 oil demand growth, with China playing a significant role in the downgrade. Despite ongoing economic stimulus efforts in China, the measures have not provided substantial support for oil prices.

U.S. Inventory Data in Focus

Market attention is now turning to U.S. oil inventory data. Analysts anticipate a rise in crude stockpiles by about 1.8 million barrels for the week ending Oct. 11, based on a Reuters poll. The American Petroleum Institute (API) will release its figures later on Wednesday, followed by the official data from the U.S. government on Thursday. These reports are expected to offer further insights into supply dynamics in the U.S.

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