Oil prices rose on Thursday, driven by a spike in fuel demand as Hurricane Milton hit Florida and heightened tensions between Israel and Iran raised concerns over potential supply disruptions in the Middle East.
Brent crude futures gained 63 cents, or 0.8%, to $77.21 a barrel, while U.S. West Texas Intermediate (WTI) futures increased by 63 cents, or 0.9%, to $73.87 a barrel by 0423 GMT.
The U.S., the world’s largest oil producer and consumer, is grappling with the impact of Hurricane Milton, which made landfall on Florida’s west coast, causing tornadoes and threatening storm surges.
The storm has already driven a surge in gasoline demand in Florida, with about a quarter of fuel stations running out of supplies, pushing crude prices higher.
Adding to market anxiety, geopolitical tensions escalated as Israeli Defense Minister Yoav Gallant promised a “lethal, precise, and surprising” strike against Iran, a major oil producer.
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This followed a 30-minute call between U.S. President Joe Biden and Israeli Prime Minister Benjamin Netanyahu, during which Biden reportedly urged Israel to avoid targeting oil facilities, though analysts at ANZ noted that U.S. influence over Israel’s strategy appears limited.
Despite these immediate concerns, longer-term demand outlooks remain cautious. The U.S. Energy Information Administration (EIA) downgraded its demand forecast for 2025 due to slowing economic activity in China and North America.
Additionally, crude inventories rose by 5.8 million barrels last week, according to EIA data, although this increase was smaller than some industry estimates.
However, recent demand growth has helped support prices. Analysts at JPMorgan noted a surge in U.S. gasoline demand, up by 800,000 barrels per day week-on-week, along with a rebound in flight activity across Asia, particularly in China, which hit an eight-week high.
With travel season winding down, attention now shifts to potential weather-driven demand increases in the coming weeks.
