Oil prices increased in early Asian trading on Thursday, driven by rising fuel demand as Hurricane Milton makes landfall in Florida, and concerns over potential supply disruptions in the Middle East as Israel plans to strike Iran.
By 1:30 pm AEDT (2:30 am GMT) Brent crude futures climbed by 25 cents, or 0.3%, to $76.83 a barrel, while U.S. West Texas Intermediate (WTI) futures rose by 26 cents, or 0.4%, to $73.51.
Hurricane Milton, the second major storm to hit the U.S. this season, made landfall on Florida's west coast, bringing tornadoes and surges of seawater. The storm has driven up gasoline demand, with about 25% of fuel stations in Florida running out of supplies, supporting crude prices.
Further supporting prices, tensions between Israel and Iran escalated. Israeli Defence Minister Yoav Gallant stated that an Israeli strike on Iran would be "lethal, precise and surprising." U.S. President Joe Biden held a 30-minute conversation with Israeli Prime Minister Benjamin Netanyahu, discussing Israel's plans regarding Iran. The White House described the call as "direct and very productive."
Despite these geopolitical concerns, weak global demand continues to weigh on the market outlook. The U.S. Energy Information Administration (EIA) downgraded its demand forecast for 2025 due to slowing economic activity in China and North America.
EIA data released on Wednesday showed a significant increase in U.S. crude inventories, which rose by 5.8 million barrels to 422.7 million barrels last week, surpassing analyst expectations but falling short of earlier estimates by the American Petroleum Institute.