Oil prices edge higher on Middle East tensions; supply-demand dynamics

(Alliance News) - Oil prices approached USD83 a barrel, as traders weighed energy fundamentals, while geopolitical risks in the Middle East continued to play out in the background.

The price of oil edged up to USD82.94 a barrel on Friday afternoon, up from USD82.66 late Thursday. In the year-to-date, prices have risen by 7.5%.

"The price of Brent crude is approaching USD83 a barrel as it advances for the second week in a row. OPEC+ efforts to control supply, coupled with ongoing geopolitical tension in the Middle East, means the price has been squeezed upwards," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

"A monthly report from the International Energy Agency has pointed out that global oil demand is coming off the boil, which will be helping to stop the price from spiking further."

At the same tine, oil supplies seem to be increasing. The IEA also noted that the global oil market may be in surplus this year because supplies outside Opec are expected to increase by 1.6 million barrels per day, Swissquote analyst Ipek Ozkardeskaya said.

The US, Brazil, Canada and Guyana, Ozkardeskaya said, are pumping oil to fill in the Opec's production gap.

In geopilitics, Israel faced renewed calls from key ally the US on Friday against launching a large-scale attack on Gaza's southern city of Rafah, AFP reports.

Israeli Prime Minister Benjamin Netanyahu has insisted he would push ahead with a "powerful" operation in the overcrowded city to achieve "complete victory" over the Hamas militant group.

On Thursday, the US military said on Thursday it had seized an Iranian weapons shipment in January that was destined for Yemen's Houthi rebels who have been attacking vessels in the Red Sea, AFP reports separately.

The US navy "seized advanced conventional weapons and other lethal aid originating in Iran and bound to Houthi-controlled areas of Yemen from a vessel in the Arabian Sea on Jan. 28," the US Central Command said on social media.

Iran-backed Houthi rebels have been attacking commercial ships in the Red Sea since November to show support for Hamas.

By Sophie Rose, Alliance News senior reporter

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