Oil prices up over strong oil demand, ongoing conflicts in Middle East

Oil prices increased on Friday amid expectations that the US Federal Reserve's (Fed) interest rate cut will start soon, ongoing conflicts in the Middle East contrary to ceasefire attempts, and rising demand hopes as the summer driving season begins.

International benchmark Brent crude traded at $86.03 per barrel at 10.36 a.m. local time (0736 GMT), up 0.73% from the closing price of $85.4 per barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) traded at $83.39 per barrel, a 0.93% rise from the previous session when it closed at $82.62 per barrel.

The rise in oil prices was driven by signs of easing inflationary pressures in the US, the world's largest oil-consuming country, increasing expectations for strong oil demand.

Consumer price index (CPI) in the country fell by 0.1% on a monthly basis in June, while it increased by 3% on an annual basis, remaining below market expectations, according to the data released on Thursday.

On a monthly basis, the CPI fell for the first time since May 2020, while annual inflation fell to the lowest level in the last year. In the same period, gasoline prices also fell by 3.8% month-on-month and 2.5% year-on-year.

Analysts stated that the data, which indicates that the disinflation trend continues in the country, increased expectations that the Fed will start rate cuts soon. Low interest rates support a lower US dollar, making oil cheaper for holders of other currencies.

Meanwhile, escalating geopolitical tensions in the Middle East, home to a vast majority of global oil reserves, despite ongoing cease-fire negotiations, continue to support upward price movements.

An Israeli warplane targeted a gathering in the city of Khan Younis, southern Gaza Strip, Anadolu learned from on late Thursday.

Witnesses said the fighter jet bombed a crowd of citizens near the Abu Hamid roundabout, resulting in an unspecified number of casualties.

However, the statements of US President Joe Biden indicating that he is determined to broker an end to Israel's ongoing war on the besieged Gaza Strip on Thursday limited further price rises by easing market players’ supply concerns.

Moreover, according to the US Energy Information Administration (EIA) data released Wednesday, gasoline demand in the US was recorded as 9.4 million barrels per day (bpd) in the week ended July 5.

The data suggested a strong demand for fuel in the US, the world's largest oil consumer, in the travel-heavy summer vacation season and supported upward price movements.