Middle East tension boosts Brent crude above $90 for the first time since October

Oil prices have surged past $90 per barrel as tensions escalate in the Middle East, sparking fears of a larger regional conflict. The increase in crude prices is linked to growing geopolitical risks, including threats of an attack by Iran on Israeli embassies in retaliation for a recent strike in Syria. The United States has expressed concerns over the situation, with President Biden urging Israel to implement a ceasefire in Gaza and protect Palestinian civilians.

Tightening global supplies and robust U.S. fuel demand have also supported oil prices, with Nymex crude and June Brent crude both hitting their highest levels since October.In contrast, U.S. natural gas futures have dropped due to high domestic inventories.

Despite the recent price surge, market analysts predict that Brent crude could reach $93-$95 per barrel due to OPEC+ production cuts and disruptions in Iranian supply. However, strong resistance at these levels could lead to profit-taking by producers and speculators. While the short-term outlook is bullish, Citi analysts remain bearish in the long term, anticipating a slowdown in demand growth by 2025 as jet fuel recovery subsides and electric vehicle adoption rises.