Oil prices continue to surge amid Middle East concerns

Oil prices stay on positive track on Friday, heading towards weekly gain as uncertainties in the global commodities market persist.

This week, the crude oil complex has seen both positive and negative movement amidst China’s weak demand outlook and increasing supply risks on account of Middle East conflicts.

Brent crude rose to $74.31 per barrel while the US benchmark West Texas Intermediate surged to $70.35 per barrel.

Israel’s public broadcaster KAN claimed Wednesday that Israel is on the verge of attacking Iran, despite US pressure to ease the offensive.

Oil traders are now waiting for Israel’s response to Iran’s ballistic missile attack in early October that may involve hitting Tehran’s oil infrastructure, although reports said Israel would only strike Iranian military targets.

Meanwhile, traders continued to pare back geopolitical risk premiums amid the Gaza cease-fire talks following Qatar’s announcement of hosting a new round of negotiations.

‘Two US and Israeli delegations will visit Doha to discuss ways to make a breakthrough in the Gaza cease-fire negotiations,’ Qatari Prime Minister Mohammed bin Abdelrahman Al Thani said on Thursday at a joint press conference with US Secretary of State Antony Blinken.

Blinken, for his part, said Gaza cease-fire talks are expected to resume in the coming days.

Israeli Prime Minister Benjamin Netanyahu approved the Israeli negotiating delegation that will travel to Qatar next Sunday to discuss the possibility of progressing Gaza negotiations.

On the demand side, investors are eyeing more clarity on the oil demand outlook in the world’s largest oil consumers, the US and China.

Analysts say the geopolitical risk premium to oil will likely remain limited given the lack of material supply disruptions and broadly bearish sentiment amid fears of sluggish demand in China and a global supply surplus next year.