Oil climbed as US President Donald Trump warned Hamas of stark consequences if it doesn’t agree to his plan to end the war in Gaza. The comments overshadowed an impending OPEC+ decision on crude supplies.
West Texas Intermediate futures rose 0.7% to settle near $61 a barrel, but were down 7.4% for the week. Trump set a Sunday evening deadline for Hamas to accept his proposal. The president earlier said Israel would have his “full backing” to destroy Hamas, which has been designated a terrorist organization by the US and EU, if it rejects the deal.
The approaching deadline is increasing concerns of a wider conflagration that could disrupt oil flows from the Middle East, the source of about one-third of the world’s supplies. Any premium associated with the two-year conflict in Gaza had previously dissipated as the conflict failed to materially affect supplies.
Elsewhere, Ukraine claimed an attack on Russia’s Orsk oil refinery near the border with Kazakhstan. Traders have honed in on Russian flows over recent weeks amid intensifying Ukrainian attacks on the country’s energy infrastructure.
Still, those tailwinds weren’t enough to shake prices out of their bearish stupor. Oil has declined four out of the past five sessions amid expectation OPEC+ will discuss fast-tracking supply hikes. Meanwhile, efforts by the Trump administration to keep oil exports flowing from northern Iraq, as well as a US government shutdown, have added to bearish sentiments.
The OPEC+ meeting comes as the oil market heads for a record surplus next year, according to the International Energy Agency. Traders have been closely watching China’s buying, which has until now helped prevent a surfeit in a narrow set of hubs in the US Midwest and Northwest Europe.
“Looking back at the past four days’ performance, it is tempting to conclude that the long-awaited glut expected to characterize the second half of the year is finally loudly knocking on the doors of our market,” Tamas Varga, an analyst at brokerage PVM, wrote in a report.
The Organization of the Petroleum Exporting Countries raised output by 400,000 barrels a day in September, formally completing the restart of 2.2 million barrels a day shuttered by the group and its partners in 2023, according to a Bloomberg survey.
Oil Prices
West Texas Intermediate for November delivery was up 0.7% to settle at $60.88 a barrel in New York.
Brent for December settlement edged up 0.7% to settle at $64.53 a barrel.
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