Brent crude oil prices edged up yesterday reaching the $80 (R1 458) per barrel mark for the first time in over a week, driven by ongoing supply-side concerns amid escalating tensions in the Middle East.
The markets have been gripped by fears of a potential Iranian strike on Israel, which could disrupt supplies from the Middle East.
On Saturday, reports indicated that an Israeli airstrike on a school-turned-shelter in Gaza resulted in the death of at least 80 people, and injuries to nearly 50 others.
Additionally, Hamas expressed uncertainty about participating in new ceasefire negotiations set for Thursday.
Oil prices also had carry-over support from better economic data last week, with positive US jobs data easing fears of a recession while expectations of a US interest rate cut increased.
This comes as some US Federal Reserve officials stated on Friday that inflation seemed to be easing enough to consider cutting rates as early as next month, which could boost oil demand.
Ricardo Evangelista, senior analyst at ActivTrades, said both supply and demand factors were bolstering oil prices as the outlook for the US economy became more positive and fears persisted of an all-out war in the Middle East involving Iran and Israel.
“Last week’s US economic data eased fears of a recession in the world’s largest economy, improving the outlook for oil demand. Simultaneously, there are growing expectations that Iran may launch a military operation in retaliation of Israel’s assassination of Tehran’s regional allies,” Evangelista said.
“If this occurs, it will likely lead to a rapid escalation that could engulf the world’s main oil-producing region in a conflict, severely disrupting the global crude supply. Against this backdrop, there may be further scope for oil price gains,” he said.
For the month of August, both grades of petrol came down by 15 cents per litre in South Africa, while diesel is set to drop by between 17 cents (50ppm) and 28 cents (500ppm).
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