Oil steadies as U.S. attempts to contain Israel-Hamas conflict

Julia Fanzeres and Alex Longley, Bloomberg October 17, 2023

(Bloomberg) – Oil steadied as the U.S. intensified diplomatic efforts to contain the crisis in Gaza, with President Joe Biden slated to visit Israel this week to try to prevent a regional conflagration.

oil rig onshore Israel- Zion Oil & Gas

West Texas Intermediate fluctuated near $87 a bbl after a week of volatile trading. Biden will travel to the country on Wednesday to show his support after the Oct. 7 attacks by Hamas that sparked the conflict. At the same time, Israel is still making plans for a ground offensive into Gaza.

Crude traders also will track events in Barbados, where Venezuela’s government may sign a deal with the U.S.-backed opposition later on Tuesday. In exchange for a freer presidential election next year, the agreement could pave the way for the U.S. to ease sanctions against the country, potentially boosting oil exports.

The crude market has been left on edge by the crisis in the Middle East and the risk that it spreads beyond Israel and Gaza, potentially endangering crude flows from key producers. Iran, which supports Hamas, has warned that an expansion of the war was “approaching the inevitable stage.” In addition to roiling futures markets in recent days, the conflict has also upended options pricing and sent freight costs soaring.

“De-escalation is the theme of this week, and that is coming from all different political sides, whether that’s Washington, Jerusalem or Tehran,” Louise Dickson, an analyst at Rystad Energy, said in an interview with Bloomberg Television. “Iran is the linchpin. Everything depends on what Iran does.”

Oil demand is showing robust growth, but there has also been extra supply despite the cuts from some members of OPEC+, Vitol SA CEO Russell Hardy said at the Energy Intelligence Forum in London, which was disrupted by protests.

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