Oil prices up amid growing supply concerns

By Duygu Alhan

Amid heightened recession concerns in the US, the world's largest oil consumer, oil prices rebounded on Tuesday, recovering some of the losses from Monday's sharp decline due to renewed supply worries.

International benchmark Brent crude traded at $76.38 per barrel at 10.40 a.m. local time (0740 GMT), an increase of 0.1% from the closing price of $76.30 per barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $73.12 per barrel at the same time, a 0.2% rise from the previous session that closed at $72.94 per barrel.

Oil prices increased on Tuesday following the concerns that rising geopolitical tensions in the Middle East, home to a vast majority of global oil, will spread to other regions damaging oil supply routes.

Risk premium in the oil markets increased following the assassination of the Palestinian resistance group Hamas’ political chief, Ismail Haniyeh in Iranian capital Tehran on July 31 after attending Iranian President Masoud Pezeshkian’s swearing-in ceremony.

Although Hamas and Iran have accused Israel of carrying out Haniyeh’s assassination, Tel Aviv has neither denied nor confirmed its responsibility.

During his meeting in Tehran with Sergey Shoygu, the secretary of Russia's Security Council, Pezeshkian said that Israel seeks to ignite the region through its assassination of Haniyeh and its other crimes against Palestinians, the Iranian state news agency IRNA reported.

He stressed that Iran never seeks to escalate tensions and trigger a war in the region, but Israel will "definitely receive a response to its crimes."

Meanwhile, several US personnel were injured Monday in a suspected attack on Ain Al-Asadmilitary airbase in western Iraq, according to the US media.

US Defense Secretary Lloyd Austin and his Israeli counterpart Yoav Gallant agreed that an attack by Iran-aligned militia earlier in the day on US forces at an airbase in Iraq marked a "dangerous escalation," the Pentagon said.

"Secretary Austin and Minister Gallant agreed that today's Iran-aligned militia attack on U.S. forces stationed at Ain al-AsadAirbase in western Iraq marked a dangerous escalation and demonstrated Iran's destabilizing role in the region," spokesman Maj. Gen. Pat Ryder said in a statement.

Moreover, the halt in production in Libya's largest oil field also fueled market players’ supply concerns in the markets. The Sharara Oilfield in southern Libya accounted for about a third of the country's production, with a daily oil production capacity of about 300,000 barrels.

On the other hand, the US Federal Reserve (Fed) left its policy rate unchanged last week and signaled a rate cut for September. Experts believe that reducing policy interest rates soon would support economic activity in the country, resulting in higher oil demand.