Oil up over rising tension between Iran and Israel

Surging COVID-19 cases forces countries to impose fresh mitigation measures, casting doubt over short-term demand recover

By Sibel Morrow – August 06, 2021

(Anadolu Agency) – Oil prices increased on Friday over the escalation in tension in the Middle East after Iran was accused of having attacked an oil tanker in the Gulf off the coast of the United Arab Emirates (UAE).

The increases came despite rising COVID-19 cases and subsequent mitigation measures that are fanning demand fears.

International benchmark Brent crude was trading at $71.62 per barrel at 0729 GMT for a 0.46% increase after closing Thursday at $71.29 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $69.42 a barrel at the same time for a 0.48% gain after ending the previous session at $69.09 per barrel.

The upward movement in prices was mainly driven by rising tension in the Middle East after Israel accused Iran of attacking the Mercer Street oil tanker, killing two people, including a British national.

The US, Israel, and the UK accused Iran of the attack and warned of joint retaliation. Israel’s defense minister even warned on Thursday that his country “is ready to attack Iran.”

Despite Tehran’s denials, the attack deepens the years-long escalation in the Middle East and hampers ongoing efforts to revive the nuclear deal between the US and Iran.

Amid negative industrial data from China and the US, the rising coronavirus cases caused by the Delta variant continue dampening upward price movements.

Manufacturing activity growth in China fell below expectations in July, while US manufacturing showed growth in July but at a slower pace than in June.

US crude oil inventories also signaled a demand decline with a build of 3.6 million barrels.

Meanwhile, the number of coronavirus infections at the ongoing Tokyo Olympics has risen to 382, organizers said on Friday.

COVID-19 related deaths in Brazil surpassed 560,000 on Thursday after the country reported 1,099 fatalities in the past 24 hours, according to Health Ministry data.

The number of virus cases has surpassed 201 million worldwide and the death toll from the virus has risen to over 4.2 million, according to the Worldometer tracking website.

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