Crude oil futures tick higher as market shrugs off supply concerns from the Middle East

Crude oil futures ticked higher in midmorning Asian trade Oct. 11 as the market shrugged off concerns over potential supply disruptions due to the war between Hamas and Israel.

At 11:26 am Singapore time (0326 GMT), the ICE December Brent futures contract was up 23 cents/b (0.26%) from the previous close at $87.88/b, while the NYMEX November light sweet crude contract rose 17 cents/b (0.20%) at $86.14/b.

"Oil prices have shown a relatively modest reaction to the recent increase in geopolitical tensions in the Middle East," said SPI Asset Management Managing Partner Stephen Innes said in an Oct. 11 note. "This aligns with the assessment from Middle Eastern risk analysts, who believe the conflict will unlikely impact the oil market's supply and demand balance immediately."

Credible evidence of Iran's involvement in the Hamas attack on Israel has not surfaced, easing concerns that the US would tighten oil sanctions against the country.

In a press briefing Oct. 10, US National Security Advisor Jake Sullivan said: "While Iran plays this broad role — sustained deep and dark role — in providing all of this support and capabilities to Hamas, in terms of this particular gruesome attack on Oct. 7, we don't currently have that information. We will continue to look for it."

Meanwhile, OPEC+ crude oil production increased 330,000 b/d in September, the second successive monthly jump, as output hikes in Nigeria, Iran and Kazakhstan balanced out ongoing cuts by Saudi Arabia and Russia, the latest Platts survey by S&P Global Commodity Insights has found.

The Saudi-Russia led alliance pumped 40.85 million b/d on average in September, with the 13 OPEC members producing 230,000 b/d more month on month, compared with a 100,000 b/d collective increase from the coalition's non-OPEC countries.

Despite the month-on-month production hike, the 19 OPEC+ alliance members with quotas are collectively undershooting their targeted production by 856,000 b/d according to the survey, primarily because African producers are unable to pump to their agreed level.

Dubai crude swaps and intermonth spreads were lower in midmorning trade in Asia Oct. 11 from the previous close.

The December Dubai swap was pegged at $85.39/b at 10 am Singapore time (0200 GMT), down 4 cents/b (0.05%) from the Oct. 10 Asian market close.

The November/December Dubai swap intermonth spread was pegged at $1.28/b at 10 am, down 11 cents/b over the same period, and the December/January intermonth spread was pegged at 96 cents/b, down 13 cents/b.

The December Brent/Dubai EFS was pegged at $2.39/b, down 29 cents/b.