Oil prices surged after Israel reported striking Hezbollah’s main headquarters in southern Beirut, escalating tensions in the Middle East. West Texas Intermediate (WTI) crude rose nearly 1% to over $68 a barrel, while Brent crude settled near $72. Despite the uptick, both oil benchmarks still recorded weekly declines due to expectations of increased supplies from Saudi Arabia and Libya.
The Israeli military’s strike followed a vow to continue targeting Hezbollah indefinitely, complicating ceasefire efforts. Iran’s embassy in Beirut called the escalation a “dangerous” shift in regional dynamics. Meanwhile, Saudi Arabia’s potential commitment to higher oil production and a resolution of Libya’s internal disputes that could boost output further weighed on prices.
“Crude is attempting to stabilize as the market absorbs the return of Libyan supply and anticipates potential OPEC+ unwinds in December,” said Rebecca Babin, senior energy trader at CIBC Private Wealth.
Crude markets have also been impacted by China’s economic outlook and stimulus measures, which have yet to provide a meaningful boost to demand. The price volatility for WTI has increased, with options markets showing a growing preference for bearish bets.
Additionally, Tropical Storm Helene caused significant disruptions across the U.S. South, killing 21 people, leaving millions without power, and shutting down 24% of oil production in the Gulf of Mexico.
