Oil Prices Settle Higher Amid Geopolitical Tensions
Red-hot March nonfarm payrolls
Oil prices settled higher on Friday, marking strong gains for the week as geopolitical tensions increased expectations of potential supply disruptions. However, optimism was tempered by easing bets on Federal Reserve rate cuts following a robust jobs report. At 14:30 ET (18:30 GMT), oil settled 0.4% higher at $86.91 a barrel. Additionally, futures expiring in May rose 0.6% to $86.91 a barrel, reaching levels last seen in mid-October. Both benchmarks recorded a 4% gain for the week, their best performance since early February.
Data released earlier on Friday revealed that nonfarm payrolls increased by 303,000 jobs in March, surpassing the anticipated 212,000 gain. This report has cast doubt on the possibility of the Federal Reserve initiating interest rate cuts as early as June, which would potentially boost economic activity and demand for oil in the United States.
Baker Hughes rig count falls
According to data from energy services firm Baker Hughes, the number of oil rigs operating in the U.S. rose to 508 from 506. Refiners are ramping up activity over the spring and summer to meet demand.
Oil prices head for a bumper week on the prospect of Israel-Iran war
Sentiment regarding oil prices was primarily fueled by the possibility of Iran entering the Israel-Hamas conflict after Tehran threatened retaliation for what it perceived as an Israeli strike on an Iranian embassy in Syria. Israeli Prime Minister Benjamin Netanyahu issued a sharp rebuke against these threats, and U.S. calls for a ceasefire in Gaza seemingly went unheeded. The escalating geopolitical tensions in the Middle East could potentially disrupt crude production, particularly if major producer Iran becomes embroiled in a conflict.
The outlook is also influenced by ongoing attacks on Russian refineries in Ukraine, heightening concerns about tighter crude supplies. Despite these factors, rising non-OPEC output, including record production levels in the U.S., continue to impact the global oil supply-demand balance.
The week’s trading was shaped by these geopolitical developments and economic indicators, underscoring the intricate interplay between global events and energy markets.
