Middle East Conflict Drives Up Oil Prices

An Israeli attack on Iran’s oil production or export facilities could cause a significant disruption, potentially exceeding one million barrels per day, Seigle indicated.

Meanwhile, in the Red Sea, another Iran-backed group, the Houthis in Yemen, claimed responsibility for attacking at least one of two vessels damaged off the port of Hodeidah.

Before the news of a missile attack, the oil market was trading lower near a two-week low, as the outlook for increased supply and lukewarm demand growth outweighed fears of a growing conflict in the region.

It is unlikely that an OPEC+ panel will recommend any changes to its current production cut agreement this week or start easing cuts from December, despite recent sharp declines in crude prices.

Key ministers of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are set to hold an online meeting of the Joint Ministerial Monitoring Committee (JMMC) on Wednesday.

Oil prices have dropped this year, with Brent falling below $70 per barrel last month for the first time since 2021, pressured by concerns over global demand and rising supply outside the oil group.

OPEC+ is currently cutting production by a total of 5.86 million barrels per day, or around 5.7% of global demand, through a series of measures agreed upon since late 2022.

Their latest agreement includes increasing production by 180,000 barrels per day in December, as part of a plan to gradually reduce the most recent layer of voluntary cuts throughout 2025.