Oil Prices Climb Amid Israel-Iran Conflict

According to report, oil prices surged in early Asian trade on Thursday, driven by concerns over potential supply disruptions in the Middle East and rising fuel demand due to Hurricane Milton's impact on Florida. Brent crude futures rose by 37 cents, or 0.5%, reaching $76.95 a barrel, while U.S. West Texas Intermediate (WTI) futures increased by 35 cents, also 0.5%, to $73.59 a barrel as of 0034 GMT.

The geopolitical landscape has been tense, particularly with Israel planning a strike on oil-producer Iran. Israeli Defense Minister Yoav Gallant has promised that any Israeli action against Iran would be “lethal, precise, and surprising,” escalating concerns among investors about potential disruptions in oil supply from the region.

Compounding these worries, the U.S. is facing its second major storm of the season. Hurricane Milton made landfall on Florida's west coast, spawning tornadoes and threatening storm surges. This weather event has already spurred a significant increase in gasoline demand within the state, with about a quarter of fuel stations reportedly running out of supplies, further supporting crude prices.

Additionally, U.S. President Joe Biden had a direct and productive 30-minute conversation with Israeli Prime Minister Benjamin Netanyahu regarding Israel's plans concerning Iran, reflecting the high stakes involved in the ongoing tensions.

Despite these immediate concerns, the broader outlook for oil demand remains subdued. The U.S. Energy Information Administration (EIA) recently downgraded its demand forecast for 2025, citing weakening economic activity in both China and North America. Furthermore, EIA data released Wednesday indicated that U.S. crude inventories surged by 5.8 million barrels to 422.7 million barrels last week—significantly higher than analysts' expectations but lower than estimates provided by the American Petroleum Institute.

As the market navigates through geopolitical tensions and natural disasters, the interplay between supply concerns and weakening demand will continue to shape the oil landscape in the coming weeks.