HOUSTON: Oil prices were little changed on Thursday as investors weighed producer group OPEC+’s decision to keep its output policy unchanged against the threat of a wider Middle East conflict after the killing of a Hamas leader in Iran.
Global benchmark Brent crude futures eased 8 cents, or 0.1%, to $80.76 a barrel by 10:30 a.m. ET (1430 GMT). U.S. West Texas Intermediate crude fell 20 cents, or 0.3%, to $77.71.
The most active contracts on both benchmarks jumped about 4% in the previous session.
Hamas leader Ismail Haniyeh was killed in the Iranian capital Tehran on Wednesday. With Israel’s killing less than 24 hours earlier of Hezbollah’s most senior military commander in Beirut, concerns rose that the 10-month war in Gaza between Israel and Hamas was turning into wider conflict that could disrupt oil supply from the region.
“Crude is continuing its latest uptrend on news that Iran is meeting with regional representatives to discuss a retaliation strike against Israel,” said Dennis Kissler, senior vice president of trading at BOK Financial, adding that oil markets will not be severely disrupted until crude supplies are impacted by the conflict.
Oil rises as Mideast tensions overshadow China data concerns
Meanwhile, a meeting of top OPEC+ ministers has kept oil output policy unchanged including a plan to start unwinding one layer of output cuts from October, and repeated that the hike could be paused or reversed if needed.
OPEC+’s policy as agreed in June calls for some members to gradually phase out cuts of 2.2 million barrels per day from October 2024 to September 2025. The group also agreed to extend earlier cuts of 3.66 million bpd until end-2025.
Also providing a floor to prices, the U.S. Energy Information Administration (EIA) on Wednesday showed robust export demand pushed U.S. crude oil stockpiles down by 3.4 million barrels in the week ended July 26.
Elsewhere, the Bank of England cut interest rates from a 16-year high on Thursday after a narrow vote in favour from policymakers divided over whether inflationary pressures had eased sufficiently.
Federal Reserve Chair Jerome Powell said on Wednesday interest rates could be cut as soon as September if the U.S. economy follows its expected path. Lower interest rates decrease the cost of borrowing, which can boost economic activity and oil demand.
In the longer term, however, investors are not confident of Chinese demand, said Phillip Nova analyst Priyanka Sachdeva, adding that this concern will continue to limit the upside in oil prices.
American Dollar Exchange Rate