Key points:

  • Oil prices rose on fears of a possible major war in the Middle East and disruptions in oil supplies.
  • Oil prices were lower at the start of the trading session due to a rise in U.S. crude inventories.
  • World crude inventories are expected to fall by 800,000 barrels per day in the second half of the year.

The increase in oil prices in Asian trading on Wednesday is explained by the aggravation of the situation in the Middle East. However, the growth in the cost of black gold was limited due to low demand for energy.

Futures contracts for Brent crude oil rose by 17 cents, which amounted to 0.16% from the previous value, reaching $76.60 per barrel. In parallel, the cost of futures for West Texas Intermediate crude oil increased by 17 cents, which resulted in growth by 0.23% and reaching $73.37 per barrel.

What’s happening in the Middle East?

Hamas has named Yahya Sinwar as its leader in the Gaza Strip, appointing him as the successor to slain former leader Ismail Haniyeh on Tuesday, confirming the hardline line it has taken since the October 7 attack on Israel.

So despite global markets falling, both key indicators snapped a three-day slide on Tuesday, July 6, as rising tensions in the Middle East raised concerns about supplies. Iran’s announcement of retaliation against Israel and the US for the killing of two militant leaders has raised concerns about the possibility of a wider war in the region.

“Any escalation in the Middle East could increase the risk of supply disruptions from the region,” said ANZ analyst Daniel Hines.

The question of demand remains open

Oil prices have rebounded from an initial drop early in the trading session, driven by an unexpected build in U.S. crude and gasoline inventories.

U.S. crude, gasoline and distillate inventories rose last week, according to market sources citing a report from the American Petroleum Institute. The API said crude inventories rose by 176,000 barrels in the week ended Aug. 2, compared with analysts’ expectations for a 700,000-barrel decline. The U.S. Energy Information Administration is scheduled to release its weekly inventory data at 10:30 a.m. (1430 GMT) on Wednesday.

Brent crude futures fell to their lowest since early January on Monday, while WTI crude futures hit their lowest since February as global stock markets rallied on concerns about a possible recession in the United States, the world’s largest oil consumer.

The U.S. Energy Information Administration (EIA) said Tuesday that global oil inventories fell by about 400,000 barrels a day in the first half of the year and are expected to fall by 800,000 barrels a day in the second half.