Oil Hits 2024 High as Middle East Tensions Overshadow Weakened Economic Outlook

Oil prices surged on Friday as tensions in the Middle East outweighed concerns about slowing global demand growth and delayed interest rate cuts. 

Brent crude futures climbed more than 2% to trade at a 6-month high above $92 a barrel Friday morning, while West Texas Intermediate broke out above $87 a barrel. As of about 1 p.m. ET, Brent was trading at $90.62 a barrel and WTI at $85.95 a barrel.

The surge came amid reports Israel was expecting a direct attack by Iran in the coming days as retaliation for a suspected Israeli airstrike on the Iranian embassy in Syria on April 1. That strike killed several Iranian military officers, for which Tehran has vowed to exact revenge. 

The threat that escalated fighting in the Middle East could disrupt global oil supply overshadowed an International Energy Agency (IEA) report Friday in which the organization lowered its forecast for global oil-demand growth in 2024 to 1.2 million barrels per day, citing “exceptionally weak” deliveries in Organization for Economic Co-operation and Development (OECD) countries, a largely complete post-COVID rebound, and increasing market share gains by electric vehicles (EVs), especially in China.

That estimate is well below the forecast published on Thursday by the Organization of the Petroleum Exporting Countries (OPEC), which expects global oil demand to increase by 2.2 million barrels per day this year.

Interest rate concerns have also weighed on oil in recent days. Hotter-than-expected inflation data on Wednesday increased the odds interest rates will remain near 23-year highs well into 2024, putting pressure on economic activity and, subsequently, oil demand.