People walk past a graffiti, depicting a Houthi fighter stopping an Israeli ship off the coast of Yemen, painted on a wall of the Saudi embassy in Sanaa, Yemen February 15, 2024.
Khaled Abdullah | Reuters
Oil prices are on pace for a weekly gain as tensions boil in the Middle East with Israel closing embassies over threats from Iran.
The West Texas Intermediate contract for May delivery rose 40 cents to $86.99 a barrel, while the Brent June contract gained 56 cents to $91.21 a barrel. U.S. crude is up 4.6% for the week while the global benchmark has added 4.3%.
Israel has closed 28 embassies around the world amid fears of retaliatory strikes from Iran, according to multiple reports in Israeli media. Iran has blamed Israel for a missile strike on its consulate in Damascus which killed a top Iranian general. Israel has not claimed responsibility for the strike.
Tamas Varga, analyst with oil broker PVM, said the geopolitical temperature has climbed to levels not seen since the Oct. 7 Hamas attack on Israeli civilians.
Ukrainian drone strikes on Russian oil infrastructure, meanwhile, has had a material impact on the supply of crude oil and products, Varga said.
“This is the most salient reason behind the rally that has taken the price of front-month Brent from $72/bbl in mid-December above $90/bbl yesterday,” he said.
Crude oil has rallied this year with WTI up nearly 21% and Brent up 17.7% on mounting geopolitical tensions and expectations that the market will enter a supply deficit.