ISLAMABAD
Crude oil prices recovered on Tuesday after falling sharply in the previous session, with markets taking stock of the current situation in Gaza.
As of 1255 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.57 (+0.65 percent) to reach $88.02 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $0.61 (+0.74 percent) to $82.92 a barrel.
However, the price of Russian Sokol decreased by $1.49 (-1.80 percent) to $81.06. Arab Light prices witnessed a dip of $1.31 (-1.41 percent) to reach $91.33 a barrel. On the other hand, the price for Opec Basket decreased to $91.60 a barrel with a decrease of $0.08 (-0.09 percent). The OPEC Reference Basket of Crudes (ORB) is made up of Saharan Blend, Girassol, Djeno, Zafiro, Rabi Light, Iran Heavy, Basra Light, Kuwait Export, Es Sider, Bonny Light, Arab Light, Murban and Merey.
Disruptions to Iranian oil flows remain the most obvious risk to the market but for now, the conflict remains limited to Gaza and Israel. In the absence of supply disruptions from the region, it is difficult to see a significant and sustained upside in prices. Traders are also concerned about fuel demand in China, the world’s second-largest economy and top crude importer, after the latest manufacturing and non-manufacturing activity data fell below market estimates. China’s non-manufacturing PMI also fell to 50.6 in October from 51.7, indicating a slowdown in its construction and services sectors. The US Federal Reserve will meet on Tuesday and Wednesday amid expectations that it will hold interest rates steady. The Fed has raised interest rates 11 times to its current range of 5.25 percent to 5.5 percent to rein in price increases without driving the economy into a recession.
The World Bank on Monday said oil prices could rise to $157 a barrel in the near term if an escalation of the Israel-Gaza conflict results in a big crude supply disruption in the Middle East. In a “large disruption†scenario, comparable to the Arab oil embargo of 1973, global supply would shrink by six million to eight million barrels a day, driving up prices to a range of $140 to $157 a barrel, the World Bank said in its latest Commodity Markets Outlook.
