Oil Holds Recovery Rally as Market Waits for Iran Retaliation

By Bloomberg

Aug 08, 2024

image is BloomburgMedia_SHVC0DDWX2PS00_08-08-2024_06-00-14_638586720000000000.jpg

A gas flare burns from a pipe aboard an offshore oil platform in the Persian Gulf's Salman Oil Field, operated by the National Iranian Offshore Oil Co., near Lavan island, Iran, on Thursday, Jan. 5. 2017. Nov. 5 is the day when sweeping U.S. sanctions on Iran’s energy and banking sectors go back into effect after Trump’s decision in May to walk away from the six-nation deal with Iran that suspended them. Photographer: Ali Mohammadi/Bloomberg

(Bloomberg) -- Oil steadied after its biggest advance in a week, with the market on edge over a possible retaliatory strike by Iran on Israel as payback for assassinations of Hamas and Hezbollah leaders.

Brent futures traded near $79 a barrel after rising 2.4% on Wednesday, while West Texas Intermediate was above $75. Israel continues to brace for an attack, although comments from Iran’s president during a phone call with his French counterpart hinted at a diplomatic path to de-escalation.

Oil has rebounded after falling to a seven-month low on Monday amid a rout in global equity markets. A halt to crude production from Libya’s biggest field has helped underpin the gains, while a rare cross-border attack by Ukrainian troops into Russia added to geopolitical tensions.

“We can’t ignore the supply risks,” said Zhou Mi, an analyst at the Chaos Research Institute in Shanghai. However, there are still macro risks that could cause negative headwinds for oil, he added.

Official data out of the US on Wednesday showed crude stockpiles fell for a sixth week to their lowest since February. That may alleviate some of the concerns about faltering demand in the biggest consumer, but there were builds at the key Cushing storage hub and in gasoline.

By Rob Verdonck