Midweek oil price surge amid Middle East tensions and market speculations
In the latter half of Wednesday, the price of American WTI crude oil increased by 3.36%, reaching $77.24 per barrel. At the same time, Brent increased by 2.71% to $80.76, reports Kazinform News Agency correspondent.
September WTI futures on the NYMEX exchange rose by 3.36% to $77.24 per barrel.
The tense situation in the Middle East is keeping investors on edge: the assassination of a prominent Hamas political leader threatens to escalate the conflict significantly. In response, Iran’s Supreme Leader Ayatollah Ali Khamenei has vowed to retaliate against Israel.
Before this, both oil benchmarks had been steadily declining, reaching a seven-week low the day before.
Earlier this spring, oil and gas industry expert Askar Smailov predicted that the rise in oil prices could be short-term. He shared his opinion that any conflict in the Middle East leads to an increase in the price of “black gold.”
“This is a typical situation indicating that oil prices are not linked to market mechanisms. Instead, it is more about 'psychonomics' if such a term exists where oil prices respond not to changes in consumption but to the news background. Therefore, the price will spike for some time,” Askar Smailov said.
According to him, further impact on oil prices will depend on how the situation plays out. Iran’s daily oil production surpasses 3 million barrels a major producer within the Organization of the Petroleum Exporting Countries (OPEC).
“The further reduction in oil prices depends on several factors - if the conflict ends, if the conflict shifts to a protracted phase, if global production volumes increase and if the dollar appreciates against the global currency basket, for example, if the Federal Reserve raises rates,” he said.
Ismailov said a short-term price increase is beneficial for Kazakhstan.
“It will help replenish the budget with foreign currency. In the long term, an increase in oil prices will lead to the growth of all sectors of the economy related to transportation. This, in turn, will cause prices in all markets to rise. Metals, food products, light industry. All prices will increase as the cost part of production rises,” he said.
Oil remains key export commodity for Kazakhstan. According to the Bureau of National Statistics, in 2023, crude oil and crude oil products accounted for 53.8% of the country's total exports.
