As the market balanced worries about growing hostilities against concerns about demand following an unexpected build in US crude inventories, oil prices dropped slightly during trade on Wednesday but remained close to their highest levels in seven weeks, according to Reuters.
By 9:35 a.m. Saudi time, Brent crude futures had dropped 17 cents to $85.16 per barrel, while US West Texas Intermediate crude had dropped 22 cents to $81.35 per barrel.
According to Russian officials and a Ukrainian intelligence source, an oil terminal fire at a major Russian port was caused by a drone strike by Ukraine, which resulted in a $1 gain for both benchmarks in the previous session.
While the US sought to prevent a wider confrontation between Israel and Iran-backed Hezbollah, Israeli Foreign Minister Israel Katz issued a warning about an impending “all out war” with Lebanon’s Hezbollah.
There’s a chance that the region’s growing conflict will interrupt major producers’ supply of crude oil.
According to Yeap Jun Rong, a market strategist at IG in Singapore, oil prices have rebounded quite sharply over the past two weeks due to possible disruption concerns “in the event of a wider conflict, as geopolitical tensions are brought to a new front between Israel and Hezbollah.”
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