Bearish Factors Build in Oil Markets Despite Middle East Tensions

Light Crude oil (WTI) prices saw significant volatility this week as a combination of geopolitical risks, weak demand from China, and rising U.S. production created a two-sided market.

Despite the price swings, crude managed to hold relatively stable, as fears of potential supply disruptions offset bearish factors like increased inventories and lackluster demand growth.

Key factors that shaped crude oil prices over the past week are highlighted, alongside potential influences on market trends in the coming days.

Middle East Tensions Create Supply Fears

A major factor supporting oil prices this week was the ongoing conflict in the Middle East, particularly between Israel and Hamas.

Concerns about the potential for supply disruptions from the region kept prices elevated. Iran, a key player in global oil production and an OPEC member, remains central to these fears as the potential for wider regional conflict has traders worried about possible interruptions to crude supplies.

Efforts by the U.S. to broker a ceasefire in Gaza temporarily eased these concerns, leading to a brief dip in prices.

However, the lack of a clear resolution, coupled with uncertainty about future developments in the region, has kept a floor under oil prices.

Any further escalation in the conflict could cause prices to spike, as traders remain highly sensitive to news from the region??.