Oil Falters as OPEC Reportedly Refuses Iran’s Embargo Call

Oil prices edged lower on Thursday after logging gains in the prior session, as the Organization of the Petroleum Exporting Countries (OPEC) reportedly refused Iran’s call for halting oil shipments to Israel and as the US considers a sanction easing on Venezuela’s energy sector.

December contract Brent crude oil futures slipped 1.74% to $89.91 per barrel, while November contract US West Texas Intermediate (WTI) crude futures, set to expire on Friday, fell 1.75% to $86.77 per barrel.

WTI crude futures for December delivery, the more active contract, were also trading 1.64% lower at $85.84 per barrel.

The international and US benchmarks rose around 2% on Wednesday following concerns over potential supply disruptions after Iran urged Islamic countries to levy a quick and total oil embargo on Israel due to the fight in the Gaza Strip.

Adding to the surge was the US observing more supply drop than expected in the previous week, further contributing to an already tight oil inventory.

OPEC Refuses Iran’s Embargo Call, Oil Faces Upside Pressure

Bringing oil prices down on Thursday was the OPEC reportedly not heeding Iranian Foreign Minister Hossein Amir-Abdollahian’s request to sanction and stop transporting oil to Israel.

Amirabdollahian, the prior day, called on the Organization of Islamic Cooperation’s (OIC) members to impose oil prohibitions on Israel and oust all Israeli ambassadors.

Four sources from the producer group said the OPEC does not immediately plan to make a move or conduct emergency meetings following Amirabdollahian’s statement.

The OPEC oversees the production of a third of oil globally, which includes certain Islamic countries, such as Iran.

Analysts stated Israel imports around 250,000 barrels per day (bpd), primarily from Kazakhstan, Azerbaijan, Iraq, and African countries. They also see lower odds of stopping oil transport from Kazakhstan and Azerbaijan, which are major allies of Israel.

Prices in crude also retreated as US President Joe Biden’s visit to the country ended without fueling the Israel-Hamas spat.

However, the oil market is facing upside pressure due to the US distributing a six-month license allowing transactions in OPEC member Venezuela’s oil sector after the country’s government and opposition agreed to a fair election in 2024.

Venezuela’s output may help keep oil prices in check amid Middle East tensions, Russian oil sanctions, and OPEC’s production cuts. Still, after coping with sanctions for years, the country would require investments to increase oil flows.