MADRID, Spain (EFE).— The escalation of the conflict in Middle East has driven crude oil prices to their biggest weekly rise in two years, reigniting fears of a rebound in inflationwhich could limit interest rate cuts.
Analysts recall that oil is still far from its annual highs and has offset the drops in September, but they warn that the situation could worsen if Israel attacks Iranian oil facilities or if Tehran chooses to block the Strait of Hormuz, through which it passes. 20% of the world’s supply.
Oil prices have become the ‘canary in the mine’ of the conflict in the Middle East this week, as they have reacted upwards to any sign that the situation is worsening.
The rise in crude oil, which has reached $79 per barrel – its highest level since the end of August – began on Tuesday, after the US warned of an imminent attack by Iran against Israel.
Prices moderated after OPEC+ maintained its plan to reactivate production starting in December, and rose again on Thursday due to the risk that Israel would attack Iranian oil facilities.
The trigger was a comment by US President Joe Biden, who said, before boarding the presidential helicopter, that this possibility really is on the table.
Analysts agree that the factors that will determine crude oil prices are the situation in the Middle East; the evolution of demand, now stagnant, and the position that OPEC+ adopts on production levels.
Ignacio Cantos, Investment Director of ATL Capital, emphasizes that the increases are limited to compensating for the falls in September.
“We see a return (of crude oil prices) to the average zone of recent years,” he explains.
“For now, oil prices remain well below their recent peak,” recall Claudio Irigoyen and Antonio Gabriel of Bank of America in a recent report.
According to Thomas Hempell, of Generali Investments, “the main signal to monitor in the short term is the risk of interruption in oil supply.”
In a situation like this, “rising energy prices could raise inflationary concerns and slow down the normalization of monetary policy.”
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