(Bloomberg) -- Oil advanced as traders tracked tensions between Israel and Iran, with strikes continuing amid US efforts to broker a cease-fire.
West Texas Intermediate rose more than 2% to settle around $72 a barrel, reversing earlier losses. Global benchmark Brent climbed to settle near $76 a barrel.
The conflict in the Middle East has continued even as US Secretary of State Antony Blinken met with Prime Minister Benjamin Netanyahu on Tuesday in another attempt to engineer a cease-fire — possibly the Biden administration’s last chance to secure a deal before the US presidential election. Lebanon’s Health Ministry said an Israeli strike near one of the capital’s main government-run health facilities killed 13 people, including a child, and wounded 57 others.
“We’re seeing a constant push-pull between expectations of a cease-fire — which would unwind the geopolitical risk premium — and concerns over potential escalation,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “This environment remains highly volatile, with traders operating under low risk thresholds, contributing to significant price swings.”
Crude has been buffeted this month — with Brent fluctuating in a range of more than $11 — as the war in the Middle East raises the potential for disruptions to supplies. At the same time, top importer China has moved to support growth with stimulus, but investors remain wary that the global oil market may swing to a surplus in the coming quarters.
“Assuming no supply disruptions in the Middle East, the oil balance looks increasingly comfortable through 2025,” ING analysts Ewa Manthey and Warren Patterson wrote in a note. “With the market returning to a sizable surplus, we should at least see the front end of the curve moving into contango,” they said, referring to the market structure which indicates oversupply.
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--With assistance from Maggie Eastland.
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