Oil prices surged by over $2 per barrel last Thursday, ending a three-day decline. This rebound was driven by a return of risk to financial markets following the U.S. Federal Reserve and the Bank of England’s decision to maintain benchmark interest rates.
Oil investors had been closely monitoring the Fed’s policy decisions due to concerns that aggressive interest rate hikes might slow down the economy and reduce energy demand. The World Bank issued a warning that the price of oil could reach a record $150 per barrel if the conflict between Israel and Hamas escalates into a full-scale war.
This situation has kept investors on high alert, as a broader conflict in the Middle East could disrupt oil supplies in the region.
The Week Ahead
On Monday, oil prices rebounded to $85.92 after Brent crude had experienced a 6% loss during the week leading up to November 3. Top oil exporters Saudi Arabia and Russia reaffirmed their commitment to additional voluntary oil supply cuts until the end of the year, with Saudi Arabia cutting 1 million barrels per day (bpd) and Russia cutting 500,000 bpd.
These announcements were made amidst growing concerns about oil supply, driven by OPEC+ output policies and fears that the Israel-Hamas conflict could impact production and supply in the Middle East.