File photo showing an oil tanker crossing the Suez Canal, Egypt.
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Crude oil futures rose Thursday as traders returned to the market after a selloff driven by waning fears of war between Israel and Iran.
THE West Texas Intermediate The contract for May delivery rose 57 cents, or 0.69%, to $83.26 a barrel. June Brent Futures added 33 cents, or 0.36%, to $87.60 a barrel.
The rise comes after oil fell more than 3% on Wednesday as traders discounted the risk of a war between Israel and Iran that could disrupt crude supplies. Israel has so far refrained from retaliating against Iran following the Islamic Republic’s unprecedented air attack over the weekend.
“Now that we’ve had this big sell-off, people are coming back,” said Phil Flynn, senior market analyst at Price Futures Group. He said oil demand appears strong as there is no indication of an economic slowdown on the horizon.
U.S. crude oil and the global benchmark fell below prices reached after the Israeli airstrike on Iran’s diplomatic compound in Damascus, Syria, earlier this month, an event that sparked the current round of hostilities.
Tamas Varga, an analyst at oil broker PVM, said it appears international pressure on Israel will force the country to respond in a “measured and moderate” manner to the weekend’s Iranian attack. Ukrainian drone attacks on Russian oil infrastructure have also declined, Varga said.
“Those with a bullish propensity are falling into apathy as the risk premium from Russia and the Middle East continues to erode,” the analyst said in a note on Thursday.
The Biden administration has imposed new sanctions against Iran’s missile and drone program, but the punitive measures have so far spared the Islamic Republic’s oil exports. Treasury Secretary Janet Yellen said Tuesday that the United States could target Iranian oil in response to the attack on Israel.
In addition to the shrinking geopolitical risk premium, prices also fell this week due to a buildup of 10 million barrels of oil in the United States last week, said Giovanni Staunovo, a strategist at UBS.
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