Crude oil prices saw a significant rise today, building on yesterday’s gains after reports emerged of Israel’s assassination of Hamas leader Ismail Haniyeh in Iran and a senior Hezbollah official in Lebanon.
The assassination of Haniyeh in Iran particularly impacted oil prices, as Tehran swiftly threatened retaliation. Analysts warned that such threats could push Brent crude prices into triple digits.
Japan’s deputy representative to the United Nations expressed concern, stating, “We fear the region is on the brink of all-out war.” The UN Security Council has urged member states to intensify diplomatic efforts to address the conflict between Israel and its neighbors.
China’s UN ambassador echoed these sentiments, calling for major nations to exert more pressure to end the conflict in Gaza.
Iran’s representative condemned the assassination as an act of terrorism, according to Reuters.
As tensions in the Middle East remain high, Brent crude prices topped $81 per barrel before retreating slightly. West Texas Intermediate also rose, nearing $79 per barrel.
Additional positive news for oil markets came from the Energy Information Administration (EIA), which reported that U.S. oil demand reached a record 20.80 million barrels per day in May. This figure was a notable revision from earlier EIA estimates of 20 million barrels daily.
Global oil inventories are decreasing, with a significant deficit compared to average levels. Eric Nuttall, a senior portfolio manager at Ninepoint Partners, highlighted improved OPEC+ production cut compliance as a factor contributing to the bullish outlook on oil.
Unless diplomatic efforts succeed in easing the Middle East tensions, oil prices are likely to continue rising due to both fundamental factors and geopolitical concerns.