Oil prices increased the most in half a year

Closing the trading session on October 13, Brent and WTI crude oil prices both increased nearly 6%, due to concerns about the spread of conflict in the Middle East.

Brent oil yesterday increased 5.7% to 90.9 USD per barrel. US crude oil WTI also increased 5.8% to 87.6 USD. Both categories recorded their biggest daily gains since April.

Oil prices soared as investors feared the conflict in the Middle East would spread as Israel began advancing into the Gaza Strip. Previously, Israel only carried out air strikes.

Brent also recorded an increase of 7.5% for the week - the strongest since February. WTI this week increased by 5.9%.

Brent oil prices skyrocketed on October 13. Chart: Bloomberg

The conflict in the Middle East has so far had a limited impact on global crude oil and gas supplies. Israel is also not a major oil producer. However, investors and observers are assessing whether the conflict may escalate and how current developments will affect supply from neighboring countries among the world's leading oil producers.

Iranian Oil Minister Javad Owji said yesterday that oil prices could touch 100 USD a barrel due to the situation in the Middle East. If evidence is found that Iran plays a role in the conflict, the US can tighten sanctions on Iran's oil exports, causing supply from this country to decrease.

This will also impact supply from Saudi Arabia. This country is freezing the proposed agreement to normalize relations with Israel that the US brokered. Previously, they confirmed to the US that they were ready to increase oil supply early next year, according to this agreement.

Another reason for rising oil prices yesterday was the US imposing sanctions on two Russian oil tanker companies for violating the 60 USD ceiling price regulation that the G7 imposed on Russian oil. Russia is currently the second largest oil producer in the world. The tightening of US control may cause oil supply to decrease.

"The oil market currently predicts that the US will be stricter in enforcing sanctions against both Russia and Iran. This will cause production to decline," said Andrew Lipow - President of Lipow Oil Associates.

The Organization of the Petroleum Exporting Countries (OPEC) this week kept its forecast for global oil demand growth unchanged. They believe that the world economy remains vibrant and demand in China - the world's largest oil importer - will increase.

In the US, oil companies this week added 4 drilling rigs. This is the strongest weekly increase since March, according to oil and gas services firm Baker Hughes.