Escalating tensions in the Middle East cause oil prices to increase

Specifically, Brent oil price increased by 1.05 USD, to 89.00 USD/barrel. Similarly, US WTI oil prices increased by 1.65 USD, equivalent to 1.97%, to 85.39 USD/barrel.

Oil prices reversed and increased due to escalating political tensions in the Middle East as Israel increased bombing in southern Gaza and violence broke out in other places in the Middle East. Prime Minister Benjamin Netanyahu said Israel was preparing for a land war in Gaza.

However, limiting the increase in oil prices is US crude oil inventories higher than expected and gloomy economic prospects in Europe.

The US Energy Information Administration (EIA) said that US crude oil inventories increased by 1.4 million barrels in the week as of October 20 to 421.1 million barrels, exceeding the increase of 240,000 barrels predicted by analysts.

Previously, data from the American Petroleum Institute (API) showed that crude oil inventories in the US had decreased by 2.668 million barrels; gasoline inventories decreased by 4.169 million barrels; distillate inventories also decreased by about 2.313 million barrels. This decline shows strong demand in the US.

Bob Yawger, director of energy futures at Mizuho, commented that data from the EIA has helped oil prices tend to decrease as this is a major shift from a decrease in API data to an increase in EIA data.

In another development, oil demand could be boosted in China as the world's largest oil importer has approved a bill to issue 1,000 billion yuan ($137 billion) in government bonds and allow the government to issue new debt from 2024 rates to boost the economy.

However, Beijing has also taken steps that could limit crude oil demand, such as setting the ceiling for refining capacity at 1 billion tons by 2025 to rationalize the large oil processing sector and limit carbon emissions.