Analysts: Oil prices are preparing for further gains... Geopolitical tensions are worrying

2023-10-22 19:34:26

Oil analysts expected crude oil price fluctuations to continue this week after a decline at the end of last week, despite recording new weekly gains in response to the continued and escalating tensions in the Middle East.
They explained in statements to Al-Eqtisadiah that oil prices recorded gains for the second week in a row and are preparing for more gains as the market anticipates a possible ground attack on northern Gaza, and prices are still rising due to worrying geopolitical tensions.
Analysts pointed out that the impact of the geopolitical conflict is stronger than the impact of fluctuating US economic data and the strength of the dollar, pointing to Allianz Trade’s warning that crude oil prices may rise to $140 per barrel and push the world into recession.
They pointed to the ambiguity surrounding developments in the current conflict in the Middle East and fears of sliding into a broader regional conflict that could lead to a record rise in crude oil prices, suggesting that prices may rise.
In this context, Ross Kennedy, Managing Director of QHA Energy Services, says, “Crude oil prices are closer to continuing record gains in light of the escalation of geopolitical risks in the Middle East,” explaining that at these levels of energy prices we realize that central banks will be more inclined to… A wait-and-see situation before interest rates are lowered, which could push the world into recession and thus lead to a slowdown in global growth.
He noted the continued rise in oil prices as a result of the direct impact of the conflict in the Middle East, which may lead to a rise in global inflation rates, noting that even before the current conflict, oil industry analysts were raising crude oil price expectations for 2023 to the level of $100 per barrel.
As for Damir Tesbrat, Director of Business Development at Technik Group International, he believes that international efforts are being made to enhance the global oil supply to absorb price jumps, and therefore the United States has appeared to ease sanctions on a prominent producer such as Venezuela to increase its production of crude oil, pointing to Wood Mackenzie’s assertion that Although this new easing of sanctions is still conditional on subsequent renewal, it could certainly be beneficial as it is considered a positive step towards the recovery of the Venezuelan oil and gas sector.
He added, “However, easing US sanctions on the oil sector in Venezuela does not guarantee a rapid or permanent recovery of production, given the huge investments required and necessary to deal with current infrastructure reforms and to address bottlenecks, especially in pipelines and upstream projects.”
Peter Bacher, an economic analyst and specialist in energy legal affairs, agrees that easing or lifting US sanctions comes within the framework of persistent efforts to control crude oil and fuel prices, especially before the US elections, noting that expectations of price fluctuations are high in light of fears of interruption of crude oil supplies from the Middle East amid… Escalation of military actions.
He said, “The increase in crude oil exports from Venezuela will not – according to international reports – have a significant impact on global oil markets at the present time, and the impact on oil and gas production will be limited during the next year.”
In turn, Arfi Nahar, an oil and gas affairs specialist at African Leadership International, adds, “The oil market is looking forward to the expanded ministerial meeting of the OPEC+ alliance next month, which will be held in critical international circumstances after the escalation of geopolitical risks and their broad repercussions on the crude oil market.”
She pointed out that the global oil market is a complex entity and is often directly affected by geopolitical events and risks.
On the other hand, with regard to prices at the end of last week, oil prices fell at settlement on Friday after two American detainees were released from Gaza, which raised hopes that the crisis would not worsen and prevent it from spreading to the rest of the Middle East region and disrupting oil supplies. Brent crude futures fell 22 cents, or 0.2 percent, to $92.16 per barrel upon settlement. US West Texas Intermediate crude futures for November delivery, which expired after Friday’s settlement, fell 62 cents, or 0.7 percent, to $88.75. per barrel.
The most widely traded December contract for West Texas Intermediate crude fell by 29 cents at settlement to $88.08 per barrel, while futures contracts for both crude oils rose by more than a dollar per barrel during Friday’s session amid increasing fears of an intensification of the conflict. On a weekly basis, Brent crude gained 1.4 percent, while US crude achieved weekly gains of 1.2 percent. John Kilduff, a partner at Again Capital in New York, said, “The Middle East remains a major focus in the market due to fears of a conflict erupting on a global scale.” The region, which is likely to cause an interruption in oil supplies.” Oil prices also benefit from expectations of an increasing deficit in the fourth quarter after Saudi Arabia and Russia, the main producers, extended supply cuts until the end of the year. On the other hand, the total rose The number of active drilling rigs in the United States increased by two during the week after rising by three last week, as drillers continue to work with restraint.
The weekly report of the American company Baker Hughes, concerned with drilling activities, stated that the total number of drilling rigs rose to 624 rigs this week and so far this year, Baker Hughes estimated the loss of 155 active drilling rigs, indicating that the number of drilling rigs for this week amounted to 451 rigs, less than the number Drilling rigs at the beginning of 2019 before the pandemic.
He noted that the number of oil rigs increased by one to 502, a decrease of 119 so far in 2023, and the number of gas rigs increased by one this week to 118, with a loss of 38 active gas rigs since the beginning of the year, while the various rigs remained the same.
He pointed out that the number of rigs drilling in the Permian Basin increased by one rig during the week, and is now 34 rigs lower than at the same time last year, while the number of rigs drilling in the Eagle Ford decreased by one rig, and is now 21 rigs lower than at this time last year. .
The report stated that crude oil production levels in the United States remained stable at 13.2 million barrels per day for the week ending October 13, according to the latest weekly estimates of the Energy Information Administration, which is the highest production level in the United States ever, indicating that US production levels have now risen by one million. barrels per day since the beginning of the year, according to estimated weekly figures.