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Oil Prices Rise Amid Growing Fears of a War in the Middle East

  • Crude oil prices spiked after Israel assassinated Hamas’s political leader on Iranian soil, leading to threats of retaliation from Tehran.
  • The ongoing conflict in the Middle East, combined with record US oil demand, has created a bullish environment for oil prices.
  • Early on Thursday morning, WTI was trading around $78.50 while Brent had climbed above $81.

Crude oil prices continued their climb today after a surge yesterday following the news of Israel assassinating Hamas’s political leader Ismail Haniyeh in Iran and a senior Hezbollah official in Lebanon. The fact the Haniyeh assassination was done in Iran gave a significant boost to prices as Tehran immediately threatened retaliation of the sort that oil analysts have said could send Brent crude into three-digit territory.

“We fear the region is at the brink of all-out war,” Japan’s deputy representative to the United Nations said as the Security Council called on UN members to double down on diplomatic pressure to resolve the conflict between Israel and its neighbors.

“Countries with major influence must put more pressure and work more vigorously … to put out the flames of war in Gaza,” China’s UN ambassador said.

Iran’s representative called the assassination of Haniyeh an act of terrorism, according to a Reuters report on the latest developments in the situation. As pressure remains high in the Middle East, Brent crude topped $81 per barrel before paring some of its gains earlier today, and West Texas Intermediate climbed closer to $79 per barrel. In additional bullish news for oil, the Energy Information Administration reported that oil demand in the United States had reached a seasonal record in May, at 20.80 million barrels daily. That was quite a significant revision from EIA estimates, which saw May demand at 20 million barrels daily.

Global oil inventories, meanwhile, are on a downward trajectory, reaching a record deficit relative to their average levels, Eric Nuttall, senior portfolio manager at Ninepoint Partners told Bloomberg this week.
Nuttall also noted OPEC+ production cut compliance improvements as a factor for a bullish view on oil.

Unless tension in the Middle East gets defused through diplomacy, oil may continue up based on fundamentals and the geopolitical premium.

NN: Its the oil Trifecta. Falling inventories, OPES+ supply cuts and War in the Middle East
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Blinken claims Middle East moves toward ‘more conflict’

United States Secretary of State Antony Blinken warned on Thursday that the Middle East region is heading for “more conflict” and urged all parties to halt “escalatory actions” after Hamas political leader Ismail Haniyeh was killed in an alleged Israeli attack in Tehran.

“Right now, the path that the region is on is toward more conflict, more violence, more suffering, more insecurity.

And it is crucial that we break the cycle. And that starts with a ceasefire,” Blinken told reporters in Mongolia. The secretary further said that a ceasefire agreement between Israel and Hamas would bring the Gaza war to an end, but it would also “produce calm in the north, between Israel and Lebanon.” “It is urgent that all parties make the right choices in the days ahead,” he concluded.

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Israel confirms death of ‘most wanted’ Hamas military head

Hamas leader Ismail Haniyeh killed in Iran, sparking fears of wider war

The killing, which Iran and Hamas blamed on Israel and pledged to avenge, threatens to plunge the region further into chaos and raised fresh doubts about Gaza cease-fire talks. The killing came hours after an Israeli airstrike in Beirut targeted a senior leader of Hezbollah, another Iranian-backed militant group locked in combat with Israel. The Israel Defense Forces said Fuad Shukr was killed in the Tuesday evening attack, blaming him for the weekend rocket attack in the Israeli-occupied Golan Heights that killed 12. Hezbollah has acknowledged his presence in the demolished building but said recovery efforts were continuing .The deadly events marked the end of two key leaders of Tehran’s proxy militant groups in the region. Reports in Arabic media said that a third, Ziad al-Nakhaleh, the secretary general of Palestinian Islamic Jihad, was in the building where Haniyeh was killed. Israel struck Lebanon and Iran in order “to set the region on fire,” senior Hamas leader Khalil al-Hayya said Wednesday at a news conference in Tehran, adding that Hamas and its allies do not want a “regional war.” But Haniyeh’s killing, he said, “sent a clear message: that our only option with this enemy is blood and resistance.” Security analysts said the events would push the region closer to a regionwide conflict, with Iran compelled to respond to an attack in the heart of its capital. The events come just months after Iran and Israel exchanged missile and rocket attacks in a confrontation that experts warned was flirting with all-out war. Israeli experts said Israel hoped the risk of escalation would be outweighed by a demonstration of military and intelligence prowess that allowed it to reach deep into Tehran. “I don’t think it will change the balance of power or the face of the war, but it sends a strong signal to Iran and the axis [of proxy militant groups],” said Yoel Guzansky, a former official on Israel’s National Security Council who is now a senior fellow at the Institute for National Security Studies in Tel Aviv. “It shows them they cannot be safe anywhere, even in Tehran.” “I think this is Israel getting some of its reputation for deterrence back,” he said. Secretary of State Antony Blinken said the Biden administration was not warned of the attack against Haniyeh ahead of time, nor did it have any part in it. “This is something we were not aware of or involved in,” Blinken told Channel News Asia in an interview in Singapore. “I’ve learned over many years never to speculate on the impact that an event has had on something else. So I can’t tell you what this means” for the region or the cease-fire discussions, he said. Haniyeh was Hamas’s longtime political leader, who lived mostly in the Qatari capital Doha. But his role at the top of the group’s hierarchy has been in question since Sinwar, the group’s military leader in Gaza, launched the Oct. 7 attacks on Israel and had been seen to manage the war along with negotiations for a cease-fire and hostage release ever since. “Sinwar might be pretty happy right now. The two were rivals inside of Hamas,” Guzansky said. Mick Mulroy, a former CIA and Marine Corps official and top Pentagon aide for the Middle East during the Trump administration, said Haniyeh’s killing represented an “absolute embarrassment” for Iran. “Haniyeh was their guest,” he said. “This was a complete failure of their security.” He said Israel “obviously had exquisite intelligence in order to carry out this precise assassination strike.” Suhail al-Hindi, a member of Hamas’s political bureau, promised revenge for Haniyeh, whose funeral is set to take place in Doha on Friday. The killing was a “significant blow to the Palestinian cause,” he said, though he added, “Hamas is an institutional movement that remains unharmed by the martyrdom of its leader.”

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Iran orders ‘direct strike’ against Israel for Haniyeh killing

Iran’s supreme leader, Ayatollah Ali Khamenei, ordered retaliation after a humiliating security failure, as Iran once again balances showing strength against the risk of escalation.

People hold up flags and signs in an urban square with a giant poster of Ismail Haniyeh, the Hamas leader.
A giant poster of Ismail Haniyeh
Iran’s supreme leader, Ayatollah Ali Khamenei,

Iranian military commanders are considering another combination attack of drones and missiles on military targets in the vicinity of Tel Aviv and Haifa, but would make a point of avoiding strikes on civilian targets, the Iranian officials said. One option under consideration is a coordinated attack from Iran and other fronts where it has allied forces, including Yemen, Syria and Iraq, for maximum effect, they said. In his public statement about Mr. Haniyeh’s death, Mr. Khamenei signaled that Iran would retaliate directly, saying, “we see avenging his blood our duty,” because it happened on the territory of the Islamic Republic. He said Israel had set the stage for receiving “a severe punishment.” Statements from other Iranian officials, including the new president, Masoud Pezeshkian, the foreign ministry, the Guards and Iran’s mission to the U.N., also said openly that Iran would retaliate against Israel and that it had a right to defend itself against a transgression on its sovereignty. Iran and the regional forces it backs — Hamas, Hezbollah in Lebanon, the Houthis in Yemen and multiple militias in Iraq — form what they call the “axis of resistance.” Leaders of those groups were in Tehran for the inauguration of Mr. Pezeshkian on Tuesday. Mr. Haniyeh was assassinated at about 2 a.m. local time, after attending the ceremony and meeting with Mr. Khamenei.  NN: Rock and Roll party time

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EIA Weekly Petroleum Report…. Oil inventories decreased by 3.4 million barrels

Weekly Petroleum Data for the week ending July 26, 2024

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve)
decreased by 3.4 million barrels from the previous week. At 433.0 million barrels, U.S. crude oil
inventories are about 4% below the five year average for this time of year.
U.S. crude oil refinery inputs averaged 16.2 million barrels per day during the week ending July
26, 2024, which was 258 thousand barrels per day less than the previous week’s average.
Refineries operated at 90.1% of their operable capacity last week. Gasoline production decreased
last week, averaging 10.0 million barrels per day. Distillate fuel production increased last week,
averaging 5.0 million barrels per day.
U.S. crude oil imports averaged 7.0 million barrels per day last week, increased by 82 thousand
barrels per day from the previous week. Over the past four weeks, crude oil imports averaged
about 6.9 million barrels per day, 5.9% more than the same four-week period last year. Total
motor gasoline imports (including both finished gasoline and gasoline blending components) last
week averaged 917 thousand barrels per day, and distillate fuel imports averaged 140 thousand
barrels per day.
Total motor gasoline inventories decreased by 3.7 million barrels from last week and are about 3% below the five year average for this time of year. Both finished gasoline and blending components inventories decreased last week. Distillate fuel inventories increased by 1.5 million barrels last week and are about 7% below the five year average for this time of year. Propane/propylene inventories
increased by 2.9 million barrels from last week and are 16% above the five year average for this
time of year. Total commercial petroleum inventories decreased by 2.4 million barrels last week.
Total products supplied over the last four-week period averaged 20.5 million barrels a day, up by
1.4% from the same period last year. Over the past four weeks, motor gasoline product supplied
averaged 9.2 million barrels a day, up by 4.2% from the same period last year. Distillate fuel
product supplied averaged 3.7 million barrels a day over the past four weeks, up by 3.2% from
the same period last year. Jet fuel product supplied was up 1.2% compared with the same four week period last year

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Israel’s Twin Strikes in Tehran, Beirut Ratchet Up Tensions

  • Hezbollah, Hamas leaders said assassinated in Beirut, Tehran
  • Risk of regional conflagration increases as revenge is vowed

Within seven hours overnight, Israel targeted top leaders of Hezbollah in Beirut and Hamas in Tehran in a show of its willingness to risk retaliation and regional conflagration while hunting down enemies abroad.Israeli officials said the killing of Hezbollah’s Fuad Shukr in the Lebanese capital was in response to a rocket attack last weekend from Lebanon that claimed the lives of a dozen young people playing soccer in the Golan Heights. Shukr was said to be Hezbollah’s chief of staff, in charge of its military activity. The missile fired into the Tehran guest house occupied by Ismail Haniyeh, the political chief of Hamas, killed him and his bodyguard. Israel has vowed to eliminate every Hamas official since the Oct. 7 attack that triggered the war in Gaza. Israel hasn’t official claimed responsibility, but no one in the country doubts who did it. “It’s part of Israel’s long-term counter-terrorism paradigm that you go after the leaders of terror organizations,” noted Yohanan Plesner, president of the Israel Democracy Institute, a think tank focused on political reform and critic of Prime Minister Benjamin Netanyahu. “There’s a broad consensus among Israelis that all those who perpetrated the Oct. 7 massacre should cease to exist.”

From the outside, the risks appear steep. Talks under way with Hamas to free hostages and impose a cease-fire on the nearly 10-month-old war in Gaza seem likely to stall if not break down.

While Lebanon’s Hezbollah has not confirmed Shukr’s death, the diplomacy aimed at getting it to stop firing missiles at Israel and move its forces away from the border seems equally likely to be affected. Israeli analysts noted that Haniyeh was killed in Iran where he was visiting, not in Qatar, where he lives, in order not to alienate the Qataris who are key to the hostage talks. Less clear is how Iran — chief sponsor of both Hamas and Hezbollah, as well as the Houthis in Yemen, all groups that are attacking Israel — will react to having a visitor to a state ceremony assassinated under its nose. On Wednesday, Iran’s Supreme Leader, Ayatollah Ali Khamenei, spoke not of diplomacy but retaliation, vowing that Israel has “prepared the ground for its severe punishment.”

Now, says Firas Modad, founder of Modad Geopolitics, a consultancy for investors, there is likely to be “a severe increase in risks to energy infrastructure” in the Persian Gulf as well as “to shipping in the Persian Gulf-Arabian Sea-Indian Ocean, to assets located near US bases in the region, to aviation” in the region and “to US and UK personnel.”

US Defense Secretary Lloyd Austin, asked while visiting the Philippines about the impact of the killings, said he didn’t think war was inevitable. “We’re going to do everything we can to make sure that we keep things from turning into a broader conflict throughout the region,” he said. “If Israel is attacked, we certainly will help defend Israel. You saw us do that in April. You can expect to see us do that again.” NN: The battle lines are being drawn. And yes their will be one hell of a battle. By the way all air traffic has been grounded i the north part  of Israel. Reguard this as the quiet in  the eye  storm . 

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Haniyeh’s killing was called by Palestinian’s Mahmoud Abbas a “cowardly act and dangerous development.”

Palestinian President Mahmoud Abbas condemned the killing in Tehran of Hamas leader Ismail Haniyeh as a “cowardly act” in a statement issued on Wednesday. The head of the Palestinian Authority described the killing as a “dangerous development.” The secretary general of the executive committee of the Palestine Liberation Organization (PLO), Hussein al-Sheikh, wrote on the platform X that his organization denounced “the assassination of the head of the Political Bureau, the national leader, Ismail Haniyeh.” Haniyeh’s killing was met with immediate condemnation and outrage across the Arab and Muslim world, with Iran threatening to retaliate. A spokesman for Iran’s Foreign Ministry said the killing would “strengthen the deep and unbreakable bond between the Islamic Republic of Iran and dear Palestine and the resistance.”

The head of the Palestinian Authority, Mahmoud Abbas, called it a “cowardly act and dangerous development.”

“We consider it a cowardly act, this pushes us to remain more steadfast in the face of the occupation, and the necessity of achieving the unity of the Palestinian forces and factions,” al-Sheikh wrote. An alliance of various political groups in the West Bank called for a general strike in response to Haniyeh’s death. Furthermore, it was suggested that confrontations with Israeli soldiers at checkpoints should be sought. Whether these were meant to be demonstrations or attacks remained unclear.

“We consider it a cowardly act”   And what do they call that ditty on October 7?   Where they shot,    dismembered  heads arms legs breasts,  raped,   and slaughtered Babbie’s, school, girls and unarmed civilians. 

Well I can guarantee them many many more cowardly acts to come…

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Brent Breaks Above $80 on Fears of Middle East Escalation

Brent Crude prices spent just a few hours below the $80 a barrel mark as tensions in the Middle East flared up again, pushing oil prices up by 2.5% early on Wednesday after the killing of the Hamas political leader in Iran. In morning trade in Europe, Brent Crude prices were rising by 2.51% at $80.50, while the U.S. benchmark, WTI Crude, was rallying by 2.62% to $76.70. Brent had fallen below the $80 per barrel threshold on Tuesday amid continued concerns about oil demand in China. But oil prices rebounded on Wednesday, rallying in morning trade in Europe, following reports that the leader of Hamas, Ismail Haniyeh, was killed in Iran. The assassination came just hours after Israel said it had killed Hezbollah senior commander Fuad Shukr in an air strike on Beirut, Lebanon, in retaliation for a Hezbollah strike on the Golan Heights in the weekend. In response to the suspected Israeli assassination of the Hamas leader, Iran’s Ayatollah Ali Khamenei said, as posted on his official website, “The criminal, terrorist Zionist regime martyred our dear guest in our territory and has caused our grief, but it has also prepared the ground for a severe punishment.”

“[F]ollowing this bitter, tragic event which has taken place within the borders of the Islamic Republic, we believe it is our duty to take revenge.”

The initial market reaction to the escalation in the Middle East is growing fear that some kind of a direct Israel-Iran conflict could emerge, and the geopolitical price premium trumped on Wednesday concerns about weaker-than-expected oil demand in China. While details are still emerging from Iran about the killing of the Hamas leader, the market was “allocating a higher risk premium for oil” early on Wednesday, ING commodities strategists Warren Patterson and Ewa Manthey wrote in a note early today. NN:  This shoots any chance of a piece deal in the ass. Told You So….. $100 here we come.

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Ismail Haniyeh, Hamas leader on Israel’s hit list since Oct. 7, is killed in an airstrike at 62

BEIRUT (AP) — Ismail Haniyeh, Hamas’ top leader in exile who landed on Israel’s hit list after the militant group staged its surprise Oct. 7 attacks, was killed in an airstrike in the Iranian capital early Wednesday. He was 62. Hamas said Haniyeh was killed at his residence in Tehran in an Israeli airstrike after he attended the swearing-in ceremony of Iran’s new president. Israel has not commented on the accusation. Haniyeh’s death would make him the latest Hamas official to be killed by Israel since the Hamas-led Oct. 7 attacks, when militants killed 1,200 people and took about 250 hostages. The devastating Israel-Hamas war the attacks set off has become the deadliest and longest in the Arab-Israeli conflict. More than 39,000 Palestinians have been killed, according to health officials in Gaza. While Hamas’ Gaza leader Yahya Sinwar is believed to have been the mastermind of the attacks, Haniyeh, head of the group’s political bureau who was seen as a more moderate force in Hamas, lauded them as a humiliating blow to Israel’s aura of invincibility. “The Al-Aqsa flood was an earthquake that struck the heart of the Zionist entity and has made major changes at the world level,” Haniyeh said in a speech in Iran during the funeral of late Iranian President Ebrahim Raisi in May. “We will continue the resistance against this enemy until we liberate our land, all our land,” Haniyeh said.

Hours after the Oct. 7 attacks, Haniyeh appeared in a video released by Hamas leading prayers with other top Hamas officials. They thanked God for the success of the attack, which blasted through Israel’s vaunted defenses and resulted in the deadliest assault in Israel’s history.

Michael Milshtein, a Hamas expert at Tel Aviv University, said Haniyeh had a commanding role in the group’s foreign policy and diplomacy, but was less involved in military affairs. “He was responsible for propaganda, for diplomatic relations, but he was not very powerful,” said Milshtein, a former military intelligence officer. “From time to time, Sinwar even laughed and joked: ‘He’s the more moderate, sophisticated leader, but he doesn’t understand anything about warfare.’” Still, Israel pledged to target all of Hamas’ leaders following the attacks and has gradually worked to fulfill that promise. Haniyeh was also under the eye of the International Criminal Court, whose chief prosecutor sought arrest warrants against him and two other Hamas leaders, Sinwar and Mohammed Deif, for war crimes and crimes against humanity. Similar requests were issued for Israeli Prime Minister Benjamin Netanyahu and Defense Minister Yoav Gallant. Haniyeh lived in self-imposed exile in Qatar since 2019 and the threats against him did not prevent him from traveling. He visited Turkey and Iran throughout the war. From Doha, he was involved in negotiations meant to bring about a cease-fire and free the hostages. His role in Hamas’ leadership also cost him his closest relatives. In April, an Israeli airstrike in Gaza killed three of Haniyeh’s sons, after which he accused Israel of acting in “the spirit of revenge and murder.” Hamas said four of the leader’s grandchildren were also killed as well as his sister in a separate strike last month. Haniyeh, who was born in Gaza’s urban Shati refugee camp, joined Hamas when it was founded in 1987. He served as an aid to Ahmad Yassin, the group’s founder, and rose throughout the years until he became its top political leader, replacing Khaled Mashaal in 2017. Haniyeh was deeply religious and studied Arabic literature at university. He was known for delivering lengthy speeches using flowery language to his supporters while serving as prime minister in Gaza. Hani Masri, a veteran Palestinian analyst who met Haniyeh several times, said the late leader’s personality was a natural fit for the head of the group’s political bureau in Doha. He described him as having been sociable and well spoken.

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Iran vows to defend territorial integrity amid Haniyeh killing

Iranian President Masoud Pezeshkian (pictured) said on Wednesday that Iran will “defend its territorial integrity, dignity, honor, and pride, and will make the terrorist occupiers regret their cowardly act” after the assassination of Hamas Leader Ismail Haniyeh. He was killed in his residence in the Iranian capital of Tehran, where he was staying after attending Pezeshkian’s inauguration on Tuesday. Pezeshkian did not outline any immediate actions by the Iranian government. Meanwhile, Hamas blamed Israel for Haniyeh’s death and warned it “won’t go unpunished.”