Brent rose as much as 2.5% to more than $74 a barrel, while West Texas Intermediate climbed above $71. Saudi Arabia and its allies delayed a series of monthly output hikes until early next year, a move anticipated by many traders amid fragile market conditions.
Meanwhile, Iran escalated its rhetoric against Israel with supreme leader Ayatollah Ali Khamenei warning of a “crushing response” in a speech on Saturday. The Wall Street Journal reported that Tehran told allies an attack would come after Tuesday’s US presidential vote but before January’s inauguration and wouldn’t be limited to missiles and drones, as two previous strikes were.
“Concerns that OPEC was poised to oversupply a fragile market have been weighing significantly on sentiment,” RBC Capital Markets LLC analysts including Helima Croft said in a Nov. 3 note. “A continuing cycle of retaliatory strikes between Israel and Iran raises the risk that oil facilities will be caught in the crosshairs.”
Oil prices have become increasingly volatile, with concerns of an oversupply next year and lackluster demand in top importer China weighing against unrest in the Middle East, which supplies about a third of the world’s crude. While futures fell early last week after the strike by Israel on Iran avoided energy infrastructure, they later pared the decline on concerns the move lower was too strong.
The oil market has a number of key events on the horizon this week, including the US election and a meeting of China’s top legislative body. Saudi Aramco is also scheduled to release its official prices for December, with the producer expected to lower its rates for Asia, according to a Bloomberg survey.
