A barrel of Brent fetched USD75.00 on Tuesday, up from USD74.37 on Monday. West Texas Intermediate jumped to USD71.22 a barrel from USD70.75.
Oil up as tensions boost prices
Lingering tension in the Middle East continues to provide support as the oil market awaits Israel's response to Iranian missile attack early this month, ING analysts Warren Patterson and Ewa Manthey said.
Meanwhile, US Secretary of State Antony Blinken arrived in Israel Tuesday to push for a ceasefire in Gaza after his administration called for an end to the war in Lebanon "as soon as possible", AFP reports.
Patterson and Manthey said a Hezbollah drone strike near Israeli Prime Minister Benjamin Netanyahu's private residence will not have helped to ease tensions.
"On the demand side, banks in China cut their loan prime rates, which would be welcome news for borrowers. While the cut was unsurprising, the reduction was slightly larger than the market expected," ING analysts said.
Tensions role on prices
"Tensions in the Middle East continue to be reflected in the Brent options market," Patterson and Manthey said, explaining: "The volatility skew shows that calls are becoming increasingly more expensive than puts as participants buy protection in the event of a price spike, given the uncertain geopolitical environment."
"However, assuming no supply disruptions in the Middle East, the oil balance looks increasingly comfortable through 2025 with Opec+ set to gradually bring 2.2m b/d of oil supply back onto the market," he said.
