Oil prices continue to rise with geopolitical tensions, demand outlook

- Data pointing to an increase in oil demand in US, world's largest oil-consuming country, continues to impact price rises

Oil prices continued its upward movement on Friday amid ongoing conflicts in the Middle East and the expectation that major Central Banks' decision to reduce interest rates will stimulate global economic activity.

International benchmark Brent crude traded at $80.37 per barrel at 11.05 a.m. local time (0805 GMT), a rise of 1.07% from the closing price of $79.52 per barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $77.25 per barrel at the same time, a 1.23% increase from the previous session that closed at $76.31 per barrel.

Geopolitical tensions continue to climb in the Middle East following the assassination of Ismail Haniyeh, the head of the Palestinian Hamas group's political bureau.

The Palestinian resistance group and Iran announced Haniyeh's assassination in an Israeli airstrike early Wednesday that targeted his residence in Tehran, one day after he attended the inauguration of Iranian President Masoud Pezeshkian.

Though Israel has remained silent about the killing, Prime Minister Benjamin Netanyahu has hinted at Tel Aviv's involvement in his assassination.

Despite cease-fire negotiations in the region, home to a vast majority of global oil reserves, assassination of Haniyeh escalated geopolitical tensions and supported upward price movements.

Meanwhile, the Bank of England (BoE) on Thursday cut the bank rate by 25 basis point from 16-year high to 5%, as widely expected.

'It is now appropriate to reduce slightly the degree of policy restrictiveness,' the BoE said in a statement following its meeting on July 31.

US Federal Reserve (Fed) Chair Jerome Powell also hinted on Wednesday at the possibility of an interest rate cut in September that investors had much hoped for.

Low interest rates are expected to reduce the cost of borrowing, boosting economic activity and oil demand.

While it is considered certain that the Fed will cut interest rates by a total of 75 basis points by the end of the year, it is predicted that a 30% probability of a 50 basis point rate cut will be made at the meeting in September.

Moreover, the European Central Bank (ECB) is expected to cut interest rates again in September with a 95% probability despite mixed inflation data.

Low interest rates decrease the value of the US dollar against other currencies and supports upward price movements by influencing demand positively. The US dollar index fell by 0.11% to 104.31 at 10.40 a.m. local time (0740 GMT), compared to the previous trading session.

Additionally, data pointing to an increase in oil demand in the US, the world's largest oil-consuming country, continues to impact price rises.

By Duygu Alhan

Anadolu Agency

energy@aa.com.tr