Oil prices surge amid rising tensions in the Middle East

Oil prices experienced a significant increase on Thursday afternoon, with U.S. benchmark prices surpassing $90 per barrel. This surge in prices was fueled by heightened tensions in the Middle East, specifically due to reports of a U.S. Navy warship intercepting multiple missiles near Yemen. According to a Pentagon press secretary, a Navy destroyer successfully intercepted three missiles and several drones that were launched by Houthi forces in Yemen. However, the intended target of these projectiles remains unknown.

U.S. Energy Department’s Strategic Petroleum Reserve

Meanwhile, the U.S. Energy Department announced its plans to post monthly solicitations for purchasing oil to replenish its Strategic Petroleum Reserve until at least May 2024. The first request is set to acquire up to 6 million barrels of oil for delivery in December and January. Interestingly, the government agency intends to secure this oil at a price of $79 per barrel or below. This purchasing price is notably lower than the average $95 per barrel received during the emergency SPR sales conducted in 2022.

Market movements in electronic trading

In electronic trading, the November West Texas Intermediate (WTI) crude contract (CLX23) observed a climb from $89.37 (Nymex settlement) to reach $90.68. Similarly, December Brent crude (BRNZ23) saw an increase from $92.38 (Thursday’s settlement) to reach $93.25.

These developments reflect the impact of increasing tensions in the Middle East on oil prices and highlight the ongoing importance of strategic oil reserves for governments worldwide.

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