Oil Prices Rise Amid US Storm and Israel-Iran Conflict Fears
Oil prices rose on Thursday as fuel demand rose in response to Hurricane Milton that is presently affecting Florida and the increased tension in the Middle East.
The main causes of this tension were between Israel and Iran. Brent crude rose by 24 cents, or 0.3%, to $76.82 a barrel. Meanwhile, U.S. West Texas Intermediate gained 28 cents, or 0.4%, to close at $73.52 a barrel at 0655 GMT.
The context of this price increase includes the landfall of Hurricane Milton along the west coast of Florida, bringing with its tornadoes and fears over huge seawater surges.
Of course, that weather event has caused a spike in the consumption of gasoline in Florida; reportedly, 25% of fuel stations have run dry. This increased gasoline demand has played an important role in supporting crude oil prices against adverse weather.
The storm is also connected with certain economic actions that become political conditions and shake up the markets. Israeli Defense Minister Yoav Gallant publicly declared that any Israeli attack on Iran would be “deadly, accurate, and unexpected.”
The words are making investors sweat as an eventual military conflict might disturb the oil supply from the already shaken Middle East region. The past discussion between U.S.
President Joe Biden and Turkish President Recep Tayyip Erdogan during a meeting on July 15 seems to be striking the mind of investors as it happened when Erdogan threatened Turkey’s regional neighbour, Greece.
All these tensions are mirrored in President Joe Biden and Israeli Prime Minister Benjamin Netanyahu. Biden’s administration is still calling on Israel not to bomb oil facilities but analysts would point out that the influence of Israelis’ allies may be weakening regarding its strategic decisions.
As geopolitical risks continue to weigh on the market, a broader concern over demand is also taking a toll on sentiment.
The U.S. Energy Information Administration recently downgraded its 2025 demand forecast, citing slowing economic activity across both China and North America.
Such a downturn in demand could also point to a shift in global dynamics, outlaying much more influence over the long-term direction of oil prices.
Fresh EIA data showed that crude inventories rose by 5.8 million barrels to a total of 422.7 million barrels in the past week, showing an important increase than what was anticipated by analysts although lower than the American Petroleum Institute early estimates.
Analysts at JPMorgan said despite these inventory concerns, oil demand has rebounded this month. They said gasoline demand in the U.S. rose by 800,000 bbl/d week-over-week as it displays strong consumption patterns.
Flights activity in Asia has rebounded sharply following the disruptions caused by the recent typhoons, with China’s daily flight activity rising to an eight week high, thereby displaying rise in travel and transportation demand that will boost fuel consumption in coming weeks particularly with regards to weather-related demand.
Altogether, natural disasters combined with geopolitics increasingly form a very confusing background for oil markets. The multiplicity of Hurricane Milton’s impact on Florida and the looming threat of conflict in parts of the Middle East, especially between Israel and Iran, is what’s exerting an upward force on prices.
And while this uncertainty created by changes in demand forecast and inventory level may overpower immediate factors supporting prices, fundamental, longer-term trends reevaluate oil demand and supply dynamics.
As the situation unfolds, stakeholders in the oil market will have to pay close attention to both weather and geopolitical changes to correctly predict future price movements and market conditions.
