Oil futures: Crude surges as as Iran launches missile strikes on Israel
Quantum Commodity Intelligence – Crude oil futures Tuesday surged higher on the deteriorating geopolitical situation in the Middle East, sparking fears a major expansion in hostilities that could disrupt oil supplies.
Front-month Dec24 ICE Brent futures were trading at $74.36/b (2100 GMT), compared to the day's range of $69.91-75.45/b and Monday's settle of $71.70/b.
At the same time Nov24 NYMEX WTI was trading at $70.68/b, versus Monday's settle of $68.17/b and an intraday range of $66.33-71.94/b.
Prices had soared around $5/b from the day's lows after the White House said that Iran was preparing an imminent ballistic missile attack on Israel, marking a major escalation in the regional war.
"The United States has indications that Iran is preparing to imminently launch a ballistic missile attack against Israel. We are actively supporting defensive preparations to defend Israel against this attack. A direct military attack from Iran against Israel will carry severe consequences for Iran," a senior White House official said in a statement.
Later in the evening Israel's IDF reported that ballistic missiles have been launched from Iran, with warning sirens reportedly sounding across central and southern Israel.
According to initial reports, Iran fired around 200 projectiles towards its adversary, although early indications suggested limited damage and casualties, triggering a row back in oil prices.
It comes after Israeli ground forces crossed into southern Lebanon early Tuesday, opening a new front against the Iranian-backed Hezbollah group.
The Israeli military described Operation Northern Arrows as "limited, localized and targeted ground raids" against Hezbollah in southern Lebanon.
Benchmarks had struggled to hold earlier gains as concerns over the health of the global economy and oil demand growth continue to weigh on sentiment, despite recent 50 basis point cuts from Washington and Beijing on borrowing costs.
Federal Reserve Chair Jerome Powell signalled in a speech Monday that more rate cuts are in the pipeline, but a similar move for November appears to have been ruled out, flagging a more measured pace as the US gets to grips with inflation.
Powell said that the US is set to see inflation cool further towards policymakers' target of 2%, allowing interest rates to come down over time: "Disinflation has been broad-based, and recent data indicate further progress toward a sustained return to two percent," Powell said at the National Association for Business Economics annual meeting.
China
China also disappointed as activity in the manufacturing sector contracted at the fastest rate in 14 months during September as demand softened and the labour market weakened, according to the latest Caixin survey.
The Caixin China General Manufacturing Purchasing Managers' Index (PMI), which provides an independent snapshot of the sector, printed at 49.3, down 1.1 points from August and the lowest level since July 2023.
It comes ahead of OPEC's Joint Ministerial Monitoring Committee (JMMC) meeting this Wednesday, where the technical body will discuss the supply/demand outlook.
The next scheduled full OPEC+ meeting is due 1 December, but the alliance may hold a meeting early November to decide on the timing of planned increases.
Benchmark Dubai crude prices – the primary selling reference for Gulf producers – tumbled by over $4/b in September with the average sales price posting a fresh 2024 low.
The Quantum average price for Dubai loading in November was $73.51/b versus $77.61/b on October crude, a drop of 5.3% and a fourth consecutive monthly loss.
