Brent holds above $86/b as geopolitical tensions rise

Quantum Commodity Intelligence – Crude oil futures were little changed in after-hours trading in Asia as the benchmark firmed at the upper end of the two-month trading range.

First month August 24 ICE Brent futures were trading at $86.08/b (0600 GMT), compared with Monday’s settlement of $86.01/b.

At the same time, August 24 NYMEX WTI trade at $81.68/bfrom Monday’s settlement of $81.63/b.

Prices were supported again this week by optimism of increased demand, while heightened geopolitical tensions were also raised amid concerns that hostilities on Israel’s northern border would escalate.

“Oil prices are rising, adding to the previous week’s gains, amid optimism about the summer demand outlook. This optimism, combined with escalating geopolitical tensions, offset a stronger US dollar,” City Index analyst Fiona Cincotta commented, noting that geopolitical risks in the Middle East and the Russia/Ukraine conflict have increased.

“However, oil gains are likely to be limited amid a stronger US dollar. The US Dollar Index is trading around a 6-week high, making dollar-denominated commodities less attractive to holders of other currencies,” the report added, noting that the Dollar Index is hovering around 105.50 .

Proposal

Meanwhile, a US-backed proposal in the Gaza conflict appears in doubt after Israeli Prime Minister Benjamin Netanyahu said in an interview that he would only be willing to accept a “partial” ceasefire.

“We are committed to continuing the war after a pause to achieve the goal of eliminating Hamas. I am not willing to give it up,” he said in an interview with Israeli television.

Houthi militants have stepped up attacks on shipping in the Red Sea, while also supporting a strike targeting Israeli maritime interests in the Mediterranean port of Haifa.

Prices were also boosted after Chinese Premier Li Qiang said on Tuesday that China’s economic growth would remain flat in the second quarter, while he was confident that the world’s second-largest economy would meet its official target of 5% growth in 2024.