Brent and Nigerian oil blends have rebounded from their September lows, stabilizing around $77 per barrel as escalating tensions in the Middle East heighten fears of supply disruptions.
As the first week of October unfolds, crude oil futures have gained strength, fueled by fears of supply disruptions as Iran, the world’s ninth-largest oil producer, remains in a standoff with Israel.
In early September, the oil market saw a sharp 11% drop in Brent futures to $70.71 per barrel on trading volumes above 7 million units, a decline that also pushed Nigeria’s oil blends below the $75 threshold.
However, October has seen a resurgence in oil prices, with Brent futures climbing above $77 per barrel amid concerns about potential supply shortages.
What to know
- Crude oil demand and supply trends are closely monitored through futures contracts like Brent and WTI crude.
- Futures are financial agreements where buyers and sellers agree on a set price for an asset at a future date.
In early September, Brent and Nigerian oil blends both dropped below $75 per barrel, with Brent futures hitting a low of $70.71.
This decline was driven by concerns of oversupply, as OPEC’s plans to boost production weighed heavily on the market, pulling crude oil futures down further.
By the end of September, however, escalating tensions in the Middle East—particularly between Israel and Iran—sparked fears of potential supply disruptions, shifting the market sentiment.
In response, stockpiling surged, with U.S. crude inventories rising by 3.9 million barrels to reach 417 million barrels in the final week of the month.
This shift in dynamics caused Brent crude to rebound, climbing back to $77 per barrel, while Nigerian oil blends edged closer to the $80 mark.
About the conflict
In April, Israel targeted the Iranian consulate in Damascus, Syria, an airstrike that killed 13 people and sparked a sharp rebuke from Iran, which viewed the attack as a violation of its sovereignty.
The situation further deteriorated on October 1, 2024, when Iran launched a retaliatory strike on Israel, in response to Israel’s assassinations of Hamas leader Ismail Haniyeh and Hezbollah chief Hassan Nasrallah.
Following this, Israeli airstrikes hit Beirut Central in Lebanon, resulting in at least six casualties. This comes after Israeli forces endured their deadliest day in over a year.
Analysts suggest that these tensions are fueling concerns over crude oil supply, prompting a rise in U.S. stockpiles by 3.9 million barrels, according to the U.S. Energy Information Administration (EIA).
In turn, oil-producing nations stand to benefit from the recent price surge, as Brent and Nigerian oil blends eye $80 per barrel.
