The Biden administration rarely admits its mistake for “conniving” Israel! As the war in the Middle East continues, oil prices are expected to start a new round of gains
Israel’s military operations in the Gaza Strip, especially the bombing of Rafah, heightened market concerns and spurred a surge in oil prices. Separately, at a closed-door meeting with Arab American leaders in Michigan last week, one of President Biden’s top foreign policy aides acknowledged that the administration had made mistakes in its response to the war in Gaza and expressed concern about what the Israeli government was willing to do. Action “without any confidence”.
The rejection of a ceasefire with Hamas and continued hostilities suggest that markets may have previously underestimated the impact of regional instability on oil prices.
International oil prices closed higher last Friday (February 9), with a weekly increase of 5.82%. The increase in Russian crude oil exports, exceeding the limits set by the OPEC+ agreement, has added to the complexity of the market. In the United States, a return to peak production levels and significant refinery shutdowns have tightened oil markets. U.S. output reached 13.3 million barrels per day, while drawdowns in gasoline and middle distillate inventories highlighted tightening refinery capacity.
These trends, coupled with a shortage of diesel in Europe, have boosted bullish sentiment in the oil market.
Israel prepares to attack Rafah
Israeli forces on Friday prepared to launch a ground attack on Hamas in the southern Gaza city of Rafah, where hundreds of thousands of people displaced by violence in the north are trapped in desperate conditions. Prime Minister Benjamin Netanyahu’s office said the military had been told to develop a plan to evacuate civilians, but aid agencies warned that a military offensive in such a densely populated area could end up killing scores of innocent people.
The Biden administration rarely “admits its mistake”
The New York Times writes that at a closed-door meeting with Arab-American leaders in Michigan this week, one of President Biden’s top foreign policy aides acknowledged that the administration had made mistakes in its response to the war in Gaza and expressed his disapproval. “There is no confidence whatsoever” in the actions the Israeli government is willing to take. Biden aide and deputy national security adviser Jon Finer expressed his most explicit regret for the administration’s “missteps” from the beginning of the violence and promised to do better. Feiner added: “We were left with a very damaging impression of how seriously the president, the government and the country valued Palestinian lives, which was completely inadequate. Frankly, this started very early in the conflict.” The Israeli-Palestinian conflict has become part of a range of political issues for Biden, who has publicly supported Israel and resisted calls for a ceasefire within the Democratic Party.
FXEMPIRE analyst James Hyerczyk predicts that the oil market will remain volatile in the coming week. Geopolitical risks, especially from the Middle East, coupled with Russia’s unpredictable export patterns, may keep oil prices rising.
Strong global demand and dollar impact
Strong demand from major oil consuming countries such as India and the United States will continue to support bullish market sentiment. However, the impact of the U.S. dollar on oil prices cannot be ignored. A strong U.S. dollar may curb global demand for U.S. dollar-denominated crude oil.
Taking these factors into account, the short-term forecast for crude oil is bullish. Markets appear to be underestimating risks related to ongoing geopolitical tensions and supply constraints. Traders should be prepared for a potential rise in oil prices, especially if tensions in the Middle East worsen or Russian export behavior continues to exceed expectations. The balance between supply concerns and global demand will be key in determining the market’s near-term direction.