Oil Prices Climb Amid Geopolitical Tensions And Supply Risks
Oil prices increased in early Asian trading on Friday, marking the third consecutive weekly rise. Geopolitical tensions and weather-related disruptions have raised concerns about supply issues, overshadowing signs of weak demand.
Brent crude futures for August settlement rose 0.2% to $86.54 a barrel, while US West Texas Intermediate crude futures for August delivery increased by 0.3% to $81.98 a barrel.
What's impacting oil supplies
The escalation of cross-border strains between Israel and Lebanon's Hezbollah has caused oil prices to rally despite weak demand in the United States. A potential widening war in the Middle East could involve countries like Iran, one of the region's top oil exporters. The French foreign ministry expressed concern over the situation in Lebanon, and Türkiye called for regional governments' support.
In addition to geopolitical tensions, weather-related disruptions have put pressure on oil supplies. Ecuador's production has declined by 100,000 barrels a day due to heavy rains, according to FGE Energy.
The US Gulf Coast, which houses much of the country's energy and export infrastructure, may also be affected by adverse weather as the US National Hurricane Center tracks at least one system that could become a cyclone and head towards the region.
On the demand side, increasing US crude stockpiles and weak gasoline consumption have capped oil price gains. Government data revealed an unexpected increase in crude inventories as fuel demand weakened. However, record travel during the July 4 weekend in the US could boost gasoline demand and help reduce stockpiles.
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