West Texas Intermediate (WTI) crude oil futures experienced a significant increase of nearly 6% on Friday, surpassing $72 per barrel, establishing a new two-month high. This surge followed Israel's preemptive strike against Iran, heightening concerns about possible disruptions in the oil supply chain. In response, Israel declared a "special situation," with reports indicating that Iran might soon retaliate with attacks on Israeli targets, including civilian areas. The potential escalation of conflict in the Middle East poses a threat to the Strait of Hormuz, a crucial channel for approximately 20% of the world's oil transportation.
Compounding the geopolitical uncertainties, the United States is arranging a partial evacuation of its personnel from the area, following Iran's threat to target American bases should nuclear discussions collapse. Supporting the rise in oil prices, data from the Energy Information Administration (EIA) revealed that US crude oil inventories decreased more than anticipated last week, indicating robust demand. Additionally, softer US inflation has bolstered expectations of Federal Reserve interest rate cuts by September, which could stimulate economic growth and, consequently, increase oil consumption. Thus, for the week, oil is on course to post its strongest performance since late February 2022.
