Oil is back above the $90 level after the US vetoed a UN vote to create a “pause” in the Israel/Palestine conflict for humanitarian work.
USOIL: Weekly Chart
Oil prices climbed from under $88 in early trading to close above the $90 mark. The next target will be the recent highs near $95.
Oil eased after the US lifted sanctions on Venezuela, giving traders hope that supply could catch up to problems in other areas of the world. However, it was later stated that years of underinvestment had crippled the country’s potential to ramp up production. The US made the move after Venezuela also agreed to hold elections next year.
Japan was also urging Saudi Arabia and other nations to increase supplies to stabilise the global oil market. Japan is the world’s fourth-largest crude buyer, with imports of 2.7 million barrels per day last year. The country also got 90% of its supply from the Middle East.
“The Government of Japan will urge oil-producing countries to stabilise the global crude oil market by increasing production and investing in production capacity,” Hirokazu Matsuno, chief cabinet secretary, said.
The OPEC countries have been holding back on production in order to stabilise prices near $80, so there is room for them to open the pumps once more.
Japanese Prime Minister Fumio Kishida, who visited Gulf countries in July, spoke to Saudi Crown Prince Mohammed bin Salman on Wednesday about improving humanitarian conditions in Gaza and helping to ease tensions.
Earlier this week, Iran called on Middle Eastern nations to impose an oil embargo on Israel.
RBC Capital Markets wrote: “Although OPEC shows no indication of taking up Iran’s call to impose an oil boycott on Israel, oil will almost certainly become a feature of the conflict in several ways.”
