Oil prices have risen ahead of U.S. President Joe Biden's visit to the Middle East, during which he is likely to seek a balance between supporting Israel and attempting to prevent any escalation in the region due to the war with the Palestinian Islamic Resistance Movement (Hamas). After falling by more than a dollar in recent hours, Brent crude oil futures increased by 25 cents, closing at $89.90 per barrel. There was no change in West Texas Intermediate crude, remaining at $86.66.
Both benchmark crude oils rose last week due to concerns about the expansion of conflict in the Middle East, with Brent crude experiencing a 7.5% increase, marking its largest weekly gain since February. Biden aims to balance his support for the Israeli war on Hamas with efforts to rally Arab nations to help prevent further conflict in the region after Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), pledged a "preventive" measure from the "resistance axis," which includes its allies like Lebanon's Hezbollah.
Edward Moya, senior market analyst at OANDA, stated, "Oil prices are swinging as energy traders await whether U.S. diplomatic efforts will succeed in preventing the escalation of the conflict between Israel and Hamas into a wider war in the region." He added, "The outlook for crude oil demand also received a slight boost after the latest round of U.S. economic data showed strong consumer price figures and an increase in industrial production."
Multiple sources reported that the Venezuelan government and opposition are set to resume long-stalled negotiations, a step that could lead to eased U.S. sanctions. Since 2019, the United States has imposed sanctions on oil exports from Venezuela, a member of OPEC, in punishment of President Nicolas Maduro's government following the 2018 elections, which Washington deemed fraudulent.
The Biden administration seeks ways to increase oil flow to global markets to curb rising prices. However, any significant increase in oil production from Venezuela will take time due to a recent lack of investments. The CEO of Saudi Arabia's state oil company (Aramco) stated on Tuesday that the company could ramp up oil production within two weeks if necessary, amid expectations that global consumption will reach a new record high by the end of the year.
