Oil Prices Rebound by 2.2% to $89.90/pbrrl

Despite conflicts in the Middle East, the global prices of crude oil edged higher, as the Brent crude at last look jumped 2.2 per cent to $89.90 per barrel and West Texas Intermediate crude gained 2.3 per cent to $85.08 per barrel at last look Friday.

Although, there was a slight drop in crude oil prices recently, but traders remain vigilant about a possible escalation in the Middle Eastern conflict, Commerzbank said in a Friday note.
This comes after reports that the US military struck Iranian targets in Syria, raising concerns of conflict spreading across the region. Iran ramped up its daily oil production by around 500,000 barrels in the first half of the year.

According to the International Energy Agency, that means the country is set to make the second-biggest contribution to the growth in oil production after the US this year. As such, Iran is again accounting for 10% of OPEC output, Commerzbank said.

However, the sanctions, which still remain in place, are making it difficult for Iran to access any new markets besides China. OPEC and allied producers are also sticking to their production targets, which means the oil market will be undersupplied in the final quarter of the year, the bank said.

Next week’s Purchasing Managers’ Indices is set to provide guidance on how demand is developing but is likely to trigger only limited price movements, Commerzbank noted.

The US is the central focus as an unchanged ISM index and a cooling labour market will suggest the economy is weakening. However, the signals are still too vague to indicate a significant demand slowdown, the bank said.

Supply-side shortages remain the focus in oil markets. The ongoing conflict between Palestine and Israel is generating fears of the possibility of a regional spillover, endangering infrastructure damage, and consequently deepening the supply deficit predicted for the rest of the year.

The US military launched airstrikes on two facilities used by Iran’s Islamic Revolutionary Guard Corps and affiliated groups in eastern Syria, Defense Secretary Lloyd Austin said Thursday