Oil prices rose on Thursday as escalating conflict in the Middle East raised concerns about potential disruptions to crude supply. However, the gains were limited due to an ample global supply outlook, which helped calm investor fears.
Brent crude futures increased by 61 cents, or 0.8%, to $74.51 per barrel as of 1:00 pm AEST (3:00 am GMT), while U.S. West Texas Intermediate (WTI) crude futures climbed by 67 cents, or 1%, to $70.77 per barrel.
The rise in prices followed an Israeli airstrike on central Beirut’s Bachoura neighbourhood early Thursday, which resulted in two deaths and 11 injuries, according to Lebanon’s health ministry.
The conflict intensified earlier in the week when Iran fired over 180 ballistic missiles at Israel, escalating tensions in the region and raising concerns about disruptions to oil flows.
Despite these geopolitical risks, an unexpected increase in U.S. crude inventories helped offset some of the upward pressure on oil prices. U.S. crude stocks rose by 3.9 million barrels to 417 million barrels for the week ending 27 September, surpassing analysts' expectations of a 1.3 million-barrel draw, according to data from the Energy Information Administration.
While the conflict has yet to significantly disrupt global oil supplies, some investors remain cautious about potential future instability. The Organisation of the Petroleum Exporting Countries (OPEC) still has enough spare capacity to compensate for any full-scale loss of Iranian oil supply should Israel target its energy facilities.
However, concerns linger about the vulnerability of energy infrastructure in neighbouring Gulf countries should Iran retaliate.