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Oil-based exchange-traded funds (ETFs) experienced a significant decline, dropping over 4%, following Israel&#8217;s recent military strikes on Iran. The strikes, which occurred over the weekend, were reported as &#8220;limited&#8221; by local media, leading analysts to downplay the potential impact on oil supplies.
What Happened: Israel&#8217;s military targeted Iranian sites in three provinces on Saturday in response to a ballistic missile attack by Tehran on October 1. According to the Iranian news agency Tasnim, the strikes resulted in the deaths of four soldiers and caused &#8220;limited damages,&#8221; sparing oil, nuclear, and civilian infrastructure. Post the strikes, oil prices saw a sharp decline of more than 4% on Monday, CNBC <a href="https://www.cnbc.com/2024/10/28/oil-slides-over-4percent-as-israels-attack-on-iran-unlikely-to-disrupt-supplies.html">reported</a> on Monday. I
See Also: <a href="https://www.benzinga.com/markets/equities/24/10/41538660/tesla-nvidia-led-market-rally-now-pressures-investment-funds-to-offload-shares-to-avoid-us-tax-l?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Tesla, Nvidia-Led Market Rally Now Pressures Investment Funds To Offload Shares To Avoid US Tax Lawsuits</a>
Following the attacks, several oil ETFs recorded notable losses.
During pre-market hours on Monday, ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) fell by 8.41%, United States Oil Fund LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) dropped 4.69%, SPDR S&amp;P Oil &amp; Gas Exploration &amp; Production ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOP#NYSE">XOP</a>) decreased by 1.81%, and MicroSectorsTM Oil &amp; Gas Exploration &amp; Production 3X Leveraged ETNs (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/OILU#NYSE">OILU</a>) saw a 4.54% drop, according to <a href="https://pro.benzinga.com">Benzinga Pro</a>.
Despite the tensions, Iran&#8217;s oil industry remains unaffected, with operations continuing as usual. Iran is responsible for up to 4% of the global oil supply, as per the U.S. Energy Information Administration. The attack comes after an Iran-backed Hamas assault on Israel on Oct. 7 last year.
Why It Matters: The recent strikes add to the ongoing geopolitical tensions that have kept energy markets on edge. Earlier this month, oil prices had already dipped by 2% after OPEC reduced its<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41320277/oil-prices-drop-2-as-opec-cuts-forecast-irans-output-rises-analyst-says-netanyahu-m"> global oil demand growth forecast</a> for the third consecutive month. This was due to actual consumption data and slightly lowered demand expectations.
Experts had warned that an Israeli attack on Iranian oil facilities could significantly disrupt global oil prices. John Driscoll, chief strategist at JTD Energy Services, highlighted the potential for <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41309234/israels-attack-on-iran-would-rattle-the-nerves-of-oil-market-says-expert">such actions to unsettle the market</a>, drawing parallels to past incidents like the 2019 drone attacks on Saudi oil fields.
Although Iran&#8217;s oil production is lower due to sanctions, any disruption could still lead to a price increase.
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Disclaimer: This content was partially produced with the help of&nbsp;<a href="https://www.benzinga.com/author/benzinga-neuro" target="_blank" rel="noreferrer noopener">Benzinga Neuro</a>&nbsp;and was reviewed and published by Benzinga editors.
Photo by William Potter on Shutterstock

News

Pre-Market Outlook

ETFs

General

OILU

Oil ETFs Plunge Premarket After Israel's Strikes On Iran

World&#8217;s second largest oil consumer, China has urged Israel and Iran to reduce escalating tensions, emphasizing the need to avoid a &#8220;vicious circle&#8221; of conflict. This appeal was made during separate phone calls on Monday between China&#8217;s top diplomat Wang Yi and his counterparts from both nations.
What Happened: China is actively mediating in the Middle East. Wang Yi also engaged in discussions with Saudi Arabian Foreign Vice-Minister Waleed bin Abdulkarim El-Khereiji. During a call with Israeli Foreign Minister Israel Katz, Wang expressed China&#8217;s deep concern over the escalating tensions with Iran, stressing that renewed conflict is not beneficial for any nation, South China Morning Post <a href="https://www.scmp.com/news/china/diplomacy/article/3282414/china-calls-israel-and-iran-avoid-falling-vicious-circle?module=top_story&amp;pgtype=homepage">reported</a> on Tuesday.
Wang Yi urged for an &#8220;immediate, complete and permanent&#8221; ceasefire in Gaza, highlighting the importance of releasing hostages and returning to the &#8220;two-state solution&#8221; for lasting peace. Katz, in a post on X, stated that he informed Wang of Iran&#8217;s role in destabilizing the region and expressed expectations for China to maintain a balanced stance.
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In a separate call, Iranian Foreign Minister Seyyed Abbas Araghchi conveyed Tehran&#8217;s concerns about the risk of further conflict escalation. He urged caution from Israel and welcomed China&#8217;s mediation efforts to restore regional peace and security.
Why It Matters: The call for de-escalation by China comes amid a backdrop of fluctuating oil prices and geopolitical tensions in the Middle East. Recently, oil prices fell over 1% due to concerns over <a href="https://www.benzinga.com/markets/asia/24/10/41257792/oil-dips-to-73-as-china-withholds-stimulus-biden-attempts-to-contain-netanyahu-over-israels-attack-o">weaker demand from China.</a> This occurred after China withheld aggressive fiscal stimulus that analysts had anticipated.
Additionally, <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41320277/oil-prices-drop-2-as-opec-cuts-forecast-irans-output-rises-analyst-says-netanyahu-m">oil prices dropped 2%</a> after OPEC reduced its global oil demand growth estimate for the third consecutive month. This decline in oil prices reflects broader concerns about the Middle East&#8217;s geopolitical stability, particularly as Israel has not yet retaliated against Iran following a recent attack involving over 180 ballistic missiles.
Price Action: At the time of writing on Tuesday during the pre-market, United States Oil Fund, LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) was down by 4.81%, Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>) was trading 5.11% lower and ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) was down by 8.13%, according to <a href="https://pro.benzinga.com">Benzinga Pro</a>.
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</ul>
Image via Shutterstock
This story was generated using <a href="https://www.benzinga.com/author/benzinga-neuro">Benzinga Neuro</a> and edited by <a href="https://www.benzinga.com/topic/Pooja-Rajkumari" target="_blank" rel="noreferrer noopener">Pooja Rajkumari</a>

Commodities

After Pulling Down Oil Prices With Weak Demand, China Urges Israel, Iran To Avoid 'Vicious Circle' Of Conflict

Crude oil prices dropped sharply late Monday afternoon after The Washington Post reported Israeli Prime Minister Benjamin Netanyahu told the Biden administration he is willing to strike military targets rather than oil or <a href="https://www.benzinga.com/government/24/10/41298349/us-hits-iran-oil-exports-with-new-sanctions-after-israel-attack-crude-oil-holds-steady-at-75">nuclear facilities in Iran.&nbsp;</a>
The Details: Netanyahu told President Joe Biden in a call last Wednesday he is planning to target military infrastructure in a retaliatory strike against Iran, according to a U.S. official and an official <a href="https://www.washingtonpost.com/world/2024/10/14/israel-iran-strike-nuclear-oil-military/">familiar with the matter</a>. 
The sources also said Israel's action against Iran will be designed to avoid any perception of "political interference in the U.S. elections" noting an attack on Iranian oil facilities could send energy prices higher. The official familiar with the matter described Netanyahu as being in a "more moderated place" during the call between the two leaders.&nbsp;
Read Next: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41320277/oil-prices-drop-2-as-opec-cuts-forecast-irans-output-rises-analyst-says-netanyahu-m">Oil Prices Drop 2% As OPEC Cuts Forecast, Iran&#8217;s Output Rises: Analyst Says Netanyahu May Doubt US Commitment To &#8216;Restricting Iranian Exports&#8217;</a>
What Else: The United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) which tracks West Texas Intermediate (WTI) light crude fell 2.01% in Monday's regular trading session after OPEC lowered its 2024 global <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41320277/oil-prices-drop-2-as-opec-cuts-forecast-irans-output-rises-analyst-says-netanyahu-m">oil-demand growth forecast</a> and its 2025 global oil-demand growth forecast. 
In its Monthly Oil Market Report <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41320277/oil-prices-drop-2-as-opec-cuts-forecast-irans-output-rises-analyst-says-netanyahu-m">released on Monday</a>, OPEC reduced its 2024 oil demand growth estimate by 106,000 barrels per day (bpd), now expecting global demand to increase by 1.93 million bpd next year. Additionally, the forecast for 2025 demand growth was lowered by 102,000 bpd to 1.6 million bpd year-over-year.
The ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) fund fell more than 2% in regular trading Monday following the lower global oil-demand growth forecast and is down another 4.51% at $27.50 after-hours. 
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</ul>
Photo: Shutterstock

Politics

Global

Movers

Oil Prices Drop After Netanyahu Says Israel Will Attack Military, Not Oil Or Nuclear Targets In Iran

Amid rising geopolitical tensions, energy markets are on edge as experts warn of potential disruptions. An Israeli military action targeting Iranian oil facilities could significantly impact global oil prices, according to industry analysts.
What Happened: John Driscoll, chief strategist at JTD Energy Services, highlighted the potential impact of an Israeli attack on Iranian oil facilities. Driscoll noted that such an event could significantly influence oil prices, drawing parallels to past incidents like the 2019 drone attacks on Saudi Arabian oil fields, according to <a href="https://www.cnbc.com/video/2024/10/14/israel-attack-on-iran-oil-bases-would-have-dramatic-effect-strategist.html">CNBC</a> on Monday.
Driscoll explained that while Iran&#8217;s oil production is around 2.5 to 3 million barrels per day, its exports are considerably lower due to sanctions. A disruption in Iranian exports, even by half a million barrels per day, could lead to a substantial price increase. He emphasized that Iran, though not as pivotal as Saudi Arabia or Abu Dhabi, still plays a role that could unsettle the market.
&#8220;While Iran is not as critical a player as say the Saudis or Abu Dhabi or Kuwait, you know still this is going to have a dramatic effect. It&#8217;s going to rattle the nerves of the oil markets,&#8221; Driscoll said.
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The strategist remarked that traders thrive on market volatility, and such geopolitical tensions could provide them with lucrative opportunities. Driscoll warned that the oil market should brace for a turbulent period in the coming weeks, as any military action could create significant fluctuations in oil prices.
Why It Matters: The potential for an Israeli strike on Iranian oil facilities comes amid heightened tensions in the region. Earlier this month, President Joe Biden confirmed that the<a href="https://www.benzinga.com/government/24/10/41172781/oil-prices-rally-biden-confirms-us-discussions-with-israel-about-striking-iran-facilities"> U.S. had discussions with Israel </a>about targeting Iran&#8217;s oil infrastructure, causing oil prices to surge by over 5%. Although Biden appeared hesitant about the idea, the mere possibility has already influenced market dynamics.
Additionally, the U.S. recently imposed new sanctions on Iran&#8217;s petroleum and petrochemical sectors following Iran&#8217;s attacks on Israel, aiming to cut off revenue streams that <a href="https://www.benzinga.com/government/24/10/41298349/us-hits-iran-oil-exports-with-new-sanctions-after-israel-attack-crude-oil-holds-steady-at-75">fund destabilizing activities</a> in the Middle East. These developments underscore the fragile state of the oil market, where geopolitical events can lead to significant price volatility.
Price Action: On Monday, during the pre-market hours, oil ETFs were showing mixed activity as per <a href="https://pro.benzinga.com">Benzinga Pro</a>. United States Oil Fund, LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) was down by 2.37% while ProShares UltraShort Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SCO#NYSE">SCO</a>) was up by 4.40%. Meanwhile, ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) was trading 4.29% lower. 
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Disclaimer: This content was partially produced with the help of&nbsp;<a href="https://www.benzinga.com/author/benzinga-neuro" target="_blank" rel="noreferrer noopener">Benzinga Neuro</a>&nbsp;and was reviewed and published by Benzinga editors.
Photo by Hamara via Shutterstock

Analyst Color

Markets

Potential Israeli Attack On Iran Would 'Rattle The Nerves Of Oil Market,' Says Expert

Oil is trading more than 5% higher Thursday on the heels of President Joe Biden&#8216;s statement that the U.S. spoke with Israel about a possible attack on Iran's oil facilities.
"We're in discussions about that,&#8221; Biden said during an interaction with reporters. 
Biden seemingly indicated he wasn&#8217;t partial to the idea of striking at Iran&#8217;s oil facilities, before cutting himself off: &#8220;I think that would be a little&#8230; anyway.&#8221; See video below.
<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"> 
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When one reporter asked whether Biden would &#8220;allow&#8221; Israel to retaliate against Iran, Biden swiftly corrected him: &#8220;First of all, we don&#8217;t &#8216;allow&#8217; Israel. We advise Israel.&#8221;
<a href="https://www.benzinga.com/news/23/10/35136071/israel-under-siege-unprecedented-hamas-attack-sparks-intense-clashes-netanyahu-says-we-are-at-war">Since Oct. 7, 2023</a>, Israel has been fighting Hamas in Gaza as well as Hezbollah in Lebanon. Both groups are considered terrorist organizations by the U.S. 
See Also: <a href="https://www.benzinga.com/news/24/10/41134015/jd-vance-tim-walz-debate-sets-a-different-tone-candidates-discuss-israel-iran-escalation-immigration">JD Vance, Tim Walz Debate Sets A Different Tone, Candidates Discuss Israel-Iran Escalation</a>
<h3 class="wp-block-heading">Oil And The Israel-Iran Conflict</h3>
Iran is the seventh-largest oil producer in the world. The country, which backs the Hezbollah militant group, exports around half its production abroad. 
China, where <a href="https://www.benzinga.com/markets/asia/24/08/40596334/asia-markets-mixed-europe-gains-crude-oil-falls-on-chinese-demand-concerns-global-markets-today-whil">oil demand is weak</a>, is its main customer.
Since Iran's <a href="https://www.benzinga.com/news/global/24/10/41126038/iran-attacks-israel-with-missiles-middle-east-tensions-escalates-s-p-500-stocks-bitcoin-fall-as-oil">missile attack on Israel</a> on Monday, the price of barrels has fluctuated. As of Oct. 3, the price of West Texas Intermediate (WTI) crude oil is $73.83 per barrel. This reflects a 5.32% increase from the previous day&#8217;s close of $70.10.
The price of Brent crude is approximately $77.76 per barrel. It has fluctuated within a range of $74.33 to $77.58 for the day.
The U.S., which is producing more oil under Biden than any other U.S. presidential administration, has been filling its reserves. The Biden administration acquired an additional <a href="https://www.benzinga.com/markets/eurozone/24/10/41146905/geopolitical-risks-may-be-biggest-threat-to-markets-boe-says">6 million barrels of crude</a> just this week.
It&#8217;s worth noting that ongoing violence in the Middle East puts the Straits of Hormuz at risk. A third of tanker traffic and a fifth of LNG frozen gas is transported through that passageway. 
The U.S. and its allies are likely determined to keep the Strait open due to its strategic importance. Any attempt to block the Strait could provoke military intervention.
Iran controls much of the northern coastline of the Strait and has previously threatened to block the passage in response to sanctions or conflicts with Western countries. 
<h3 class="wp-block-heading">Market Reaction</h3>
So far, market reaction to the Middle East conflict is relatively mute compared to February 2022 when Russia invaded Ukraine.
At the time, the oil market reacted with significant volatility and disruption, leading to a sharp rise in global prices. 
Brent crude, the global benchmark, surged above $100 per barrel for the first time since 2014, and by March 2022, it had briefly spiked to $139 per barrel, near the all-time high.
Oil-related exchange-traded funds, or ETFs, were trending up at last check Thursday afternoon. Here&#8217;s where they stand: 
<ul>
<li>United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) is up 4.05% to $75.71</li>
<li>Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>) is up 4.08% at $15.06</li>
<li>SPDR S&amp;P Oil &amp; Gas Exploration &amp; Production ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOP#NYSE">XOP</a>) is up 3.1% at $139.56</li>
<li>Energy Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLE#NYSE">XLE</a>) up 1.65% at $92.22</li>
<li>ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) is up 6.59% at $28.81</li>
<li>VanEck Vectors Oil Services ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/OIH#NYSE">OIH</a>) is up 1.89% at $297.58</li>
</ul>
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</ul>
Image: Shutterstock

Government

Regulations

Sector ETFs

Oil Prices Rally: Biden Confirms US 'Discussions' With Israel About Striking Iran Facilities

WIIM

Oil is trading higher following a report suggesting that President Biden said the US Is "discussing" potential support for Israel striking Iran's oil facilities when asked about the issue.

Macro Economic Events

Economics

Oil is trading higher following Iran's Tuesday attack on Israel, which has caused supply uncertainty.

ProShares Ultra Bloomberg Crude Oil (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NASDAQ">UCO</a>) shares are trading higher by 6.43% to $27.06 Tuesday. Geopolitical tensions in the Middle East are once again on the rise, and this time, the potential for <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/24/10/41120592/iran-set-to-launch-ballistic-missile-attack-against-israel-report">significant conflict</a> is having a direct impact on financial markets, particularly in the energy sector.
The latest development comes from reports that Iran has launched a ballistic missile attack on Israel in retaliation for an airstrike that reportedly killed Hezbollah leader Hassan Nasrallah.
As tensions escalate, the market is responding, and one of the major movers is UCO.
Why This Matters: UCO is a leveraged exchange-traded fund (ETF) designed to provide investors with twice the daily return of the Bloomberg WTI Crude Oil Subindex, which tracks the price movements of West Texas Intermediate (WTI) crude oil. 
Essentially, UCO moves in direct correlation with oil prices, but with twice the volatility. When oil prices rise, UCO magnifies those gains, making it a popular choice for investors looking to capitalize on significant shifts in the energy market. On the flip side, it also carries higher risks due to its leverage.
Read Also: <a href="https://www.benzinga.com/personal-finance/24/10/41125098/suze-orman-says-the-personal-finance-of-americans-is-really-really-bad-even-though-the-stock-mar">Suze Orman Says The Personal Finance Of Americans Is &#8216;Really, Really Bad&#8217; Even Though The Stock Market Is Doing Great</a>
The ongoing conflict between Iran and Israel is particularly concerning for global oil markets because the Middle East remains a critical region for oil production and export. Iran, a major oil producer, controls access to the Strait of Hormuz, a vital chokepoint through which approximately 20% of the world's oil supply passes. 
Any conflict involving Iran could disrupt oil flows through the Strait, leading to supply shortages and sharp increases in crude oil prices. The threat of a ballistic missile attack by Iran increases the likelihood of a broader regional conflict, which would exacerbate fears of supply disruptions.
What Else: As reports of these imminent attacks surfaced, the price of crude oil surged, with investors rushing to hedge against the uncertainty. The United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>), which directly tracks oil prices, saw a 3% increase, while UCO spiked even higher due to its leveraged nature. 
UCO's upward movement reflects the market's anticipation that if tensions in the Middle East continue to escalate, crude oil prices could soar further.
In addition to the direct impact on oil supply routes, increased military presence by the United States in the region could further strain relations with Iran, potentially leading to sanctions or military engagements that could disrupt oil exports from the region. In such a scenario, oil prices would likely surge even more dramatically, pushing UCO to higher levels.
Read Also: <a href="https://www.benzinga.com/news/24/10/41124443/whats-going-on-with-delta-united-and-spirit-airlines-shares-tuesday">What&#8217;s Going On With Delta, United and Spirit Airlines Shares Tuesday?</a>
According to data from&nbsp;<a href="https://benzinga.grsm.io/register174">Benzinga Pro</a>, UCO has a 52-week high of $36.51 and a 52-week low of $22.88.

Why ProShares Ultra Bloomberg Crude Oil (UCO) Is Up 6% Today

Macro Notification

Oil is trading higher following a report suggesting Iran could be preparing to attack Israel.

Oil futures edged up but then fell on Monday as <a href="https://www.benzinga.com/markets/commodities/24/09/40754979/gas-station-charges-less-than-2-50-per-gallon-how-inflation-energy-prices-are-faring-now">a possible hurricane </a>makes its way toward the U.S. Gulf Coast, continuing last week&#8217;s losses.
Brent crude was up 16 cents, or 0.23%, to $71.22 a barrel at 8:15 a.m. ET while West Texas Intermediate crude futures were 19 cents, or 0.28%, higher at $67.86, Reuters reported.
By 10 a.m. ET, however, Brent crude slipped 26 cents, or 0.37%, to $70.80 a barrel by 10 a.m. ET while West Texas Intermediate crude futures were down 21 cents, or 0.3%, at $67.53.
Prices of Brent crude had dropped over the past six trading sessions, falling by more than 11%, or almost $9 a barrel, to post the lowest closing price since December 2021 on Friday.
Analysts noted that Monday&#8217;s brief rebound was driven in part by concerns over a potential hurricane approaching the U.S. Gulf Coast, along with supply disruptions from Libya, which have been pushing prices higher, according to Reuters.
Libya&#8217;s NOC (National Oil Corporation) late last week declared force majeure on several crude cargoes loading from the Es Sider port, with oil production curtailed by a political standoff over the central bank and oil revenue, four trading sources with knowledge of the matter told Reuters.
Read Also: <a href="https://www.benzinga.com/markets/asia/24/08/40553739/oil-prices-rally-as-middle-east-tensions-rise-libya-warns-of-potential-production-halt-10-energy-sto">Oil Prices Rally As Middle East Tensions Rise, Libya Warns Of Potential Production Halt: 10 Energy Stocks On The Move Monday</a>
A weather system in the southwestern Gulf of Mexico is forecast to become a hurricane before it reaches the northwestern U.S. Gulf Coast, the U.S. National Hurricane Center said on Sunday. The U.S. Gulf Coast accounts for about 60% of U.S. refining capacity.
&#8220;A small recovery in prices is under way this morning, inspired by hurricane warnings that might threaten the U.S. Gulf Coast, but the wider conversation remains on where demand will come from and what OPEC+ can do,&#8221; said PVM analyst John Evans, according to Reuters.
The OPEC+ oil producer group last week held back a planned output increase of 180,000 barrels per day for October by two months in reaction to tumbling crude prices
Trading houses Gunvor and Trafigura are expecting oil prices to range between $60 and $70 a barrel due to sluggish Chinese demand and persistent oversupply, executives told the APPEC conference in Singapore on Monday.
Meanwhile, Morgan Stanley cut its Brent price forecast for the fourth quarter from $80 a barrel to $75, adding that prices are likely to remain around that level unless demand weakens further.
Price Action: Oil companies saw gains into Monday&#8217;s early-morning trading.
<ul>
<li>Exxon Mobil Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>) gained 0.56% to $113.28</li>
<li>Chevron Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVX#NYSE">CVX</a>) rose 0.58% to $139.37</li>
<li>Marathon Oil Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MRO#NYSE">MRO</a>) picked up 0.52% to $26.86</li>
</ul>
Exchange-traded funds that hold oil stocks declined.
<ul>
<li>United States Oil Fund LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) declined 1.15%</li>
<li>ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) fell 2.13%</li>
<li>United States Brent Oil Fund LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BNO#NYSE">BNO</a>) declined 1.04%</li>
</ul>
Read Now:
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<li><a href="https://www.benzinga.com/etfs/specialty-etfs/24/07/39600380/oil-prices-near-3-month-high-at-84-as-record-us-travel-demand-hurricane-season-impact-supply">Oil Prices Near 3-Month High At $84 As US Travel Demand Hits Record, Hurricane Season Impacts Supply</a></li>
</ul>
Image created using artificial intelligence via Midjourney.

Futures

Oil Prices Seesaw As Potential Storm Nears US Gulf Coast

Oil prices fell on Wednesday after OPEC+ sources said that it was talking about holding back a plan <a href="https://www.benzinga.com/news/24/09/40703958/trumps-drill-baby-drill-pledge-may-not-deliver-promised-energy-price-cuts-experts-warn">to boost output</a> in October due to concerns over demand and production possibly coming back to Libya.
Brent crude futures were down 53 cents, or 0.72% , to $73.20 as of 12:15 pm ET Wednesday. 
U.S. West Texas Intermediate crude futures were down 57 cents, or 0.81%, to $69.77. 
Both benchmarks had earlier lost $1 and then bounced back to gain $1 from Tuesday&#8217;s close, following the OPEC+ news.
A broader sell-off had seen prices for Brent crude futures drop as much as 11%, or about $9, in a little over a week to reach a low of $72.63 on Wednesday, Reuters reported. Benchmark prices fell more than 4% Tuesday.
Weak data from the U.S. and China had boosted forecasts of a weaker global economy and oil demand that triggered a broader decline&nbsp;in world markets.
Read Also: <a href="https://www.benzinga.com/trading-ideas/24/09/40687828/brent-crude-under-pressure-amid-supply-expansion-concerns">Brent Crude Under Pressure Amid Supply Expansion Concerns</a>
At the same time, traders believed a dispute stopping Libyan oil exports may come to an end and therefore increase crude oil supply.
These factors have concerned OPEC+ over market volatility after the group planned to boost output in October, making it consider delaying the hikes.
 China&#8217;s manufacturing activity fell to a six-month low in August as growth in new home prices&nbsp;cooled off, according to data released Saturday.
Meanwhile, in the U.S., Institute for Supply Management data on Tuesday showed manufacturing stayed soft.
Reports from the American Petroleum Institute are due at 4:30 p.m. ET Wednesday and from the Energy Information Administration at 11 a.m. ET Thursday.
Price Action: Oil companies and exchange traded funds that hold their stocks trended downward into Wednesday&#8217;s early-afternoon trading.
<ul>
<li>Exxon Mobil Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>) slipped 0.62% to $114.75 </li>
<li>Chevron Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVX#NYSE">CVX</a>) declined 0.82% to $143.48</li>
<li>Shell plc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SHEL#NYSE">SHEL</a>) fell 0.80% to $68.83</li>
<li>United States Oil Fund LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) slid 1.31% to $70.16</li>
<li>ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) lost 2.33% to $25.58</li>
<li>United States Brent Oil Fund LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BNO#NYSE">BNO</a>) declined 1.11% to $28.40</li>
</ul>
Read Now: 
<ul>
<li><a href="https://www.benzinga.com/markets/cryptocurrency/24/09/40714894/stocks-rebound-chipmakers-halt-bloodbath-as-traders-upgrade-rate-cut-wagers-tesla-rises-do">Stocks Rebound, Chipmakers Halt Bloodbath As Traders Upgrade Rate Cut Wagers; Tesla Rises, Dollar Tree In Free Fall: What&#8217;s Driving Markets Wednesday?</a></li>
</ul>
Photo: Shutterstock

Trading Ideas

SHEL

Oil Prices Retreat As OPEC+ Discusses Delay In Production Hikes

The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, are expected to extend their current production cuts this weekend, as per delegates and analysts.
What Happened: The OPEC+ alliance, which was scheduled to meet in person in Vienna on Jun. 1, has now moved the meeting to a virtual platform on Jun. 2. The group is currently implementing a combined 5.86 million barrels per day of supply cuts, with 2 million barrels per day set to expire at the end of this year, as per a CNBC <a href="https://www.cnbc.com/2024/05/31/oil-alliance-opec-could-extend-production-cuts-this-weekend.html?taid=66595f9eb890320001ff036f&amp;utm_campaign=trueanthem&amp;utm_medium=social&amp;utm_source=twitter%7Cmain">report</a> on Tuesday.
Market participants are closely watching whether the remaining 2.2 million barrels per day of cuts, which are in place until the end of the second quarter, will be extended. This is in light of projected demand increases, particularly in the summer months.
Three OPEC+ delegates, speaking on the condition of anonymity, told CNBC that the 2.2 million-barrels-per-day supply reductions are likely to be prolonged. The group is also monitoring individual members&#8217; quota compliance and has requested overproducers to implement additional cuts, with Iraq and Kazakhstan having detailed compensation plans.
The OPEC+ coalition&#8217;s decision to extend production cuts is influenced by the anticipated rise in summer demand, driven by factors such as the conclusion of China&#8217;s refinery maintenance and increasing U.S. consumption as summer approaches. 
"Come June, China would be largely out of refinery maintenance, U.S. consumption is improving as summer moves closer, so June should already see negative crude balances. And then August is the peak month for tightness," Viktor Katona, lead crude analyst at Kpler, said according to the report.
Investors interested in some of the most profitable oil ETFs on the market to determine if the oil sector aligns with their investment strategy might consider the following options: Vanguard Energy ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VDE#NYSE">VDE</a>), VanEck Oil Services ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/OIH#NYSE">OIH</a>), United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>), iShares U.S. Oil &amp; Gas Exploration &amp; Production ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/IEO#BATS">IEO</a>), SPDR S&amp;P Oil &amp; Gas Equipment &amp; Services ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XES#NYSE">XES</a>), and ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>).
See Also: <a href="https://www.benzinga.com/news/24/05/39084577/elon-musk-mocks-steve-jobs-agrees-apple-could-be-light-years-ahead-of-competition-if-it-embraced-ope?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Elon Musk Mocks Steve Jobs, Agrees Apple Could Be &#8216;Light Years&#8217; Ahead Of Competition If It Embraced Open</a>
Why It Matters: Recent geopolitical events, such as the Israeli forces entering <a href="https://www.benzinga.com/markets/emerging-markets/24/05/39048961/all-eyes-on-rafah-as-israeli-forces-enter-safe-zones-spain-ireland-and-norway-officially">safe zones in Gaza</a>, have also added to the uncertainty in the oil market. The ongoing tensions in the Middle East have contributed to global inflation and energy security concerns, further influencing OPEC+&#8217;s decision-making.
Oil prices have remained range-bound in the first half of the year, with the potential for spikes due to developments in the Middle East. 
Rystad&#8217;s Jorge Leon noted that regional escalations could add a risk premium of up to $10 per barrel. OPEC+ delegates told CNBC that while the situation in the Gaza Strip still adds some pressure, the market has mostly absorbed its impact.
OPEC+ must also navigate its relationship with the U.S., which has criticized the coalition&#8217;s supply cuts over gasoline price concerns. Last week, the Biden administration announced the release of 1 million barrels of gasoline from reserves to lower pump prices. Similar measures were taken with the Strategic Petroleum Reserve during the COVID-19 pandemic. 
However, an OPEC+ delegate noted these actions are unlikely to have a long-term impact beyond summer price relief. The U.S. usually aims to replenish its emergency state reserves stockpile, according to the report.
Read Next: <a href="https://www.benzinga.com/markets/equities/24/05/39063828/elon-musk-slams-joe-biden-says-president-cares-a-lot-more-about-whether-tesla-is-unionized-over-?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Elon Musk Slams Joe Biden, Says President &#8216;Cares A Lot More About Whether Tesla Is Unionized&#8217; Over EV Maker&#8217;s Environmental Impact</a>
Image Via Shutterstock 
This story was generated using <a href="https://www.benzinga.com/author/benzinga-neuro">Benzinga Neuro</a> and edited by <a href="https://www.benzinga.com/topic/Kaustubh-Bagalkote" target="_blank" rel="noreferrer noopener">Kaustubh Bagalkote</a>

iShares Dow Jones US Oil & Gas Exploration & Production Index Fund

SPDR S&P Oil & Gas Equipment & Services ETF

OPEC+ Likely To Extend Production Cuts Amid Rising Summer Demand: Report

U.S. oil production is at record levels, as data from the Energy Information Administration puts 2023 production of crude oil on its way to break <a href="https://www.benzinga.com/topic/oil">pre-pandemic records.</a>
The U.S. has been the top world producer of crude oil since the mid-2010s, a fact that has gone under the radar for much of the public. The latest data, from September, show a daily production of 13.2 million barrels a day, beating the previous record set in November 2019 of 13 million barrels.
The global oil market entered<a href="https://www.benzinga.com/news/23/12/36112158/oil-enters-bear-market-as-crude-prices-slump-to-five-month-low"> bear territory last week</a>, even as OPEC+ nations agreed on new oil cuts. U.S. record oil production is helping push the needle towards declining prices as stockpiles in the U.S. beat market expectations.  
On Monday, the national average price for regular gasoline was $3.15 per gallon. This average peaked at $4.84 per gallon in June 2022 during a period of extremely high inflation and dipped to as low as $2.97 in December 2022.
<a href="https://www.axios.com/2023/12/06/oil-production-biden?utm_source=twitter&amp;utm_campaign=editorial&amp;utm_medium=social">According</a> to Axios, the Biden administration walks a thin line between publicizing its efforts to ramp up production and jeopardizing its strong position against global warming.
&#8220;I&#8217;m going to get those gas prices down again, I promise you,&#8221; said President Joe Biden during a September speech aimed at harnessing support for his reelection.
While the president is keen on using oil prices as a way to increase support for the upcoming election, he has held back on taking credit for the increased production, as it conflicts directly with efforts to bring down carbon emissions, which are a key point in the Democratic political agenda.
Also Read: <a href="https://www.benzinga.com/news/23/12/36184372/tesla-cybertruck-early-reservation-spots-fetch-big-bucks-on-ebay-would-you-pay-10k-to-get-yours-asap">Tesla Cybertruck Early Reservation Spots Fetch Big Bucks On eBay: Would You Pay $10K To Get Yours ASAP?</a>
Oil markets took a dive last week after Sultan Al Jaber, president of the COP 28 climate conference, expressed skepticism about the relationship between <a href="https://www.benzinga.com/news/large-cap/23/12/36070489/al-jaber-controversy-at-cop28-events-president-says-no-science-comments-misrepresented">fossil fuels and climate change</a>.
The United States Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) is down 8.4% in the past month but recovered 0.4% on Monday. ProShares Ultra Bloomberg Crude Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) gained 1.3% on Monday but added 13.1% in losses over the past month. Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>) is also down 8.4% in the past month, recovering 0.9% on Monday.
Al Jaber has been one of the most controversial figures<a href="https://www.benzinga.com/markets/esg/23/11/36031535/what-cop28-says-about-geopolitics-u-s-uae-relations-and-the-fate-of-the-oil-sector"> of the climate conference</a> given his role as CEO of the Abu Dhabi National Oil Company, a United Arab Emirates state-owned oil company that ranks as the 12th largest producer in the world and 14th largest greenhouse gas polluter.
Exxon Mobil Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>) was also under the spotlight of criticism during the COP28 as CEO Darren Woods defended a strategy of carbon capture <a href="https://www.benzinga.com/markets/equities/23/12/36070049/exxon-defends-carbon-capture-amid-skepticism-at-cop28-report">to fight climate change</a>, which the IEA has called "implausible."
Exxon shares are down 5% in the past month, and closed 0.07% higher on Monday. Other U.S.-listed oil giants are also down this month as US oil production increased include: ConocoPhillips (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/COP#NYSE">COP</a>) is down 2.7% while Devon Energy Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DVN#NYSE">DVN</a>) is down 2.2% and Shell PLC (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SHEL#NYSE">SHEL</a>) is down 3.2%.
In spite of heavy pressure from climate groups to reduce emissions, global crude oil production increased by a record 5.4% rate in 2022.
Now Read: <a href="https://www.benzinga.com/trading-ideas/long-ideas/23/12/36182507/market-strategists-expect-these-2-magnificent-7-ai-sleepers-to-outperform-apple-stock-in">Market Strategists Expect These 2 Magnificent 7 AI &#8216;Sleepers&#8217; To Outperform Apple Stock In 2024</a>
Photo: Shutterstock

Crude Conundrum: US Oil Production Hits Record Levels, But Energy Stocks Aren't Pumping

The launch of COP28 on Thursday is the latest glimpse at the ongoing effort <a href="https://www.benzinga.com/markets/equities/23/11/36028451/cop28-climate-summit-a-moment-of-reckoning-for-oil-execs-or-just-d-ja-vu">to decarbonize the global economy.</a>
Whether its goal is to be a force for good or, as the BBC recently <a href="https://www.bbc.co.uk/news/science-environment-67508331">revealed</a>, serve "as an opportunity to strike oil and gas deals" remains unclear. 
Either way, the so-called &#8220;Conference of the Parties&#8221; says a lot more than what's coming from its climate talks: it's lending a view into geopolitics, political alliances, power friendships, and the fate of the oil sector.
Earlier this month, a report by the UN&#8217;s Environment Program warned that the emissions goals set during the landmark Paris Agreement of 2015 <a href="https://www.benzinga.com/markets/esg/23/11/35883432/stocks-to-watch-as-the-world-turns-to-the-2023-un-climate-change-conference-cop28">are not enough to keep global temperatures under the established limit</a> of 1.5°C (2.7°F) below pre-industrial levels.
Current projections put the course of average temperatures at a catastrophic 2.9°C (5.2°F) rise above pre-industrial levels before 2100.
The UAE Paradox: The designation of Sultan Al Jaber as president of the climate conference has been a major source of controversy. After all, he is the CEO of the Abu Dhabi National Oil Company, a UAE state-owned oil company that ranks as the 12th largest producer in the world and 14th largest greenhouse gas polluter.
The BBC, citing leaked documents, reported this week that the UAE intends to use its role as host as a way to close fuel deals with 15 other nations.
The paradox of having an oil baron at the helm of the world's most important summit on climate change, which itself is being held in Dubai, a city built by wealth made from oil extraction, has been pointed out by several high-profile critics as outrageous.
Al Gore, climate activist Greta Thunberg, and hundreds of climate organizations from around the globe signed a collective letter in January. The letter denounced the Abu Dhabi National Oil Company as a major entity responsible for greenhouse gas emissions.
Production and use of oil and gas are top contributors to climate change. They contribute to a combined 55% of greenhouse gas emissions, according to the International Energy Agency.
"This decision threatens the legitimacy and efficacy of COP28," wrote the signing parties, adding that the company has launched programs to expand its oil output in years to come.
What some climate activists have found even more worrying is the friendly relationship between Al Jaber and former Secretary of State John Kerry. 
Kerry&#8217;s work under the Obama administration was key in securing the Paris climate deal in 2015.
"It may or may not work," Kerry <a href="https://time.com/6335225/sultan-al-jaber-cop28-interview/?utm_source=twitter&amp;utm_medium=social&amp;utm_campaign=editorial&amp;utm_term=climate_climate-change&amp;linkId=248438394">told</a> Time magazine earlier this month. "Some might call it an experiment to have an oil-and-gas-­producing entity host COP. That's the big question."
According to Politico, Kerry and Al Jaber met 22 times in the two-and-a-half years since Kerry took the job of U.S. Special Presidential Envoy for Climate under Biden.
Their unusually tight relationship has become a cause for concern for climate activists, who fear that economic incentives from oil production could come in the way of climate goals.
As the first and seventh-largest oil and gas producers in the world, respectively, the U.S. and the United Arab Emirates have more than enough reasons to maintain good relations.
"The U.S. has much more interests aligned with the Emirates than we do," said a senior European diplomat to Politico.
The push towards reducing carbon emissions will have its effects on stocks from several sectors, including oil and gas, as well as those associated with ESG (Environmental, Social, and Governance) policies.
The world needs to reduce its carbon emissions by 42% by 2030 to keep on track toward Paris Agreement goals. This means a huge drop in sales for oil and gas producers. 
While Al Jaber has publicly expressed the need to reduce carbon emissions, the Abu Dhabi National Oil Company which he leads continues to have the largest expansion plans for oils and gas production of any other company in the world, according to data from the Global Oil and Gas Exit List <a href="https://www.theguardian.com/environment/2023/nov/15/cop28-host-uae-oil-plans-data">quoted</a> by The Guardian.
Last year, the company's board presented a $150 billion plan to upsize oil production to 5 million barrels a day by 2027. These expansion plans put it at the top of a list of companies whose expansion plans go against goals to reduce carbon emissions.
In this top-five are also Chevron Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVX#NYSE">CVX</a>) and Exxon Mobil Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>).
According to the data, the 1600 largest oil producers have spent $170 billion in the search for new fossil fuel resources since 2021.
Optimists expect the COP28 to give birth to real commitments and plans to reach the needed reduction in greenhouse gas emissions. These plans would go directly against the current business models of major oil companies, whose transition to a renewables-based market is still not a guarantee of maintaining the profitability levels of today.
ConocoPhillips (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/COP#NYSE">COP</a>), Devon Energy Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DVN#NYSE">DVN</a>), Phillips 66 (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PSX#NYSE">PSX</a>) are also liable to shifts related to climate policy.
<a href="https://www.benzinga.com/money/best-oil-etfs">The largest ETFs in the oil sector</a>, by amount of assets, are:
<ul>
<li>United States Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>)</li>
<li>ProShares Ultra Bloomberg Crude Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>)</li>
<li>Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>)</li>
</ul>
Shutterstock photo.

What COP28 Says About Geopolitics, US-UAE Relations And Fate Of The Oil Sector

The outbreak of war in the Middle East is threatening to hamper the Fed's efforts<a href="https://www.benzinga.com/topic/inflation"> to control inflation</a>.
<a href="https://www.benzinga.com/top-stories/23/10/35218882/they-are-like-isis-netanyahu-blinken-unite-against-hamas-as-imf-monitors-oil-market-impact">A Thursday visit from Secretary of State Antony Blinken</a> to Israel was confirmation of unconditional support from the U.S. for Israel in its war against Palestinian terrorist organization Hamas.
Israel&#8217;s military reported on Thursday afternoon that over 1,200 people, including at least 27 Americans, have been killed by Hamas&#8217; attacks, with around 2,800 individuals injured. In response to these attacks, Israeli counterstrikes in Gaza have resulted in the deaths of approximately 1,537 individuals, according to the Gaza Ministry of Health, CBS News <a href="https://www.cbsnews.com/live-updates/israel-hamas-palestinian-war-attacks-gaza-strip/">reported</a>.
On Thursday morning, International Monetary Fund managing director Kristalina Georgieva <a href="https://www.benzinga.com/top-stories/23/10/35218882/they-are-like-isis-netanyahu-blinken-unite-against-hamas-as-imf-monitors-oil-market-impact">expressed concern over how the conflict could affect global oil markets</a>, which are liable <a href="https://www.benzinga.com/news/23/10/35138138/how-the-israel-hamas-conflict-could-impact-oil-markets">to be disrupted by war in the Middle East</a>, where roughly a third of the global oil output is produced.
While the specific area where the conflict is located is not a significant oil-producing region, major disruptions in the global oil markets could come if further conflict arises between the U.S. and Iran, a long-time backer of Hamas operations against Israel. 
Earlier this week the Iranian government denied having any relationship with the Hamas attacks, as Supreme Leader Ayatollah Ali Khamenei said "We defend Palestine, we defend the fights."  This denial is contradicted by reports that Iran had a direct role in training Hamas for the latest attack on Israeli civilians, <a href="https://www.wsj.com/world/middle-east/iran-israel-hamas-strike-planning-bbe07b25">according </a>to The Wall Street Journal.
While <a href="https://www.benzinga.com/news/23/10/35214135/us-prepares-2b-aid-package-for-israel-to-crush-hamas-amid-intensifying-conflict-report">Congress is preparing a $2-billion aid package</a> for Israel, several prominent U.S. politicians <a href="https://www.benzinga.com/news/23/10/35153697/lindsey-graham-suggests-joe-biden-threaten-iranian-oil-infrastructure-amid-israel-hamas-conflict-we">denounced Iran&#8217;s participation in the massacre</a>, proposing a double-down on oil sanctions. 
Yet the already fragile relationship between the U.S. and Iran, the world&#8217;s eight largest oil producers, could still have an impact on oil prices, exacerbating inflation worldwide and in the U.S.
Also Read: <a href="https://www.benzinga.com/general/entertainment/23/10/35171815/hollywood-celebrities-react-to-israel-conflict-i-stand-with-israel-you-should-too-israeli-a">Hollywood, Celebrities React To Israel Conflict: &#8216;I Stand With Israel You Should Too&#8217; Israeli Actress Gal Gadot Asks For The World Not To Sit On Fence</a>
Israel-Hamas Different From Ukraine-Russia War: Last month, <a href="https://www.benzinga.com/news/23/09/34703828/a-prisoner-exchange-with-iran-could-impact-the-oil-sector-heres-how">a prisoner swap between the U.S. and Iran</a> emerged as the first sign of improving diplomatic relations after decades of tension over the Middle-eastern country's nuclear program. Iran's reported military assistance to Russia in the war on Ukraine has also been met with discontent in Washington.
Russia's invasion of Ukraine in February 2022 launched a world-wide energy crisis which impacted most economies as the world recovered from the economic consequences of the COVID-19 pandemic.
But the impact on oil prices stemming from the Israel/Hamas conflict is different in nature.&nbsp;
Energy prices spiked after the Ukraine invasion as the Western world imposed sanctions on Russia, which at the time remained a major supplier of natural gas to the European Union. Russia is also the third-largest oil producer, accounting for about 10% of global production.
The Israel-Hamas conflict's capacity to impact global oil prices is directly dependent on Iran&#8217;s level of involvement in the war on Israel. Iran controls the Strait of Hormuz, where an estimated 20-30% of global oil inventory passes.
That scenario would put pressure on the U.S. and other Western nations to increase sanctions on Iran, shrinking the supply of oil to the West and raising barrel prices.
Conflict Could Affect Consumer Prices: Inflation in the U.S. has fallen to an annual 3.7% for both August and September, as per <a href="https://www.benzinga.com/news/econ-s/23/10/35218470/cpi-surpasses-estimates-inflation-prints-3-7-in-september-reigniting-fed-rate-hike-speculations">data released by the Department of Labor on Thursday</a>. While the rate is significantly lower than the peak of 9.1% reached during June 2022, it remains high above the 2% goal that the Fed is chasing <a href="https://www.benzinga.com/top-stories/23/10/35202528/is-federal-reserve-near-the-end-of-rate-hiking-campaign-3-economists-weigh-in-on-fomc-minutes">by maintaining decades-high interest rates</a>.
The threat of energy prices affecting recent victories over inflation was highlighted as a major risk by Fed officials in minutes from the latest FOMC meeting, also released Thursday, where Fed governors voted to maintain the federal funds rate at between 5.25% and 5.50%.
On Wednesday, the CEO of oil exploration company Pioneer Natural Resources (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PXD#NYSE">PXD</a>) told CNBC that "If Iran enters the war, we&#8217;re going to see much higher oil prices."
The price of a barrel of oil is behind gas prices, a major consumer staple in which Americans spend an average 3% of their total budget. Oil prices also affect the cost of airline tickets, as well as the cost of shipping, which is then transferred to the rest of the supply chain, reaching the price of consumer goods.
Stocks To Watch: Rising oil prices could have a positive effect on the bottom lines of U.S.-based oil extraction companies, like Exxon Mobil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>), Chevron (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVX#NYSE">CVX</a>) and Shell (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SHEL#NYSE">SHEL</a>) .
ETFs like the United States Oil Fund LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>), the iShares U.S. Oil &amp; Gas Exploration &amp; Production ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/IEO#BATS">IEO</a>) and the ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) closely follow the oil industry.
If inflation spikes again, most industries will suffer. But the 2022 spike saw some companies more effected than others. Tech companies were among the worst hit by rising inflation, which had a major toll on the stocks of Apple (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), Amazon (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>) and Meta (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>) during 2022.
Industries navigating the consumer discretionary rail could also take a big hit. These include automakers like Tesla (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>), General Motors (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GM#NYSE">GM</a>), Ford (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/F#NYSE">F</a>) and Volkswagem (OTC:<a class="ticker" href="https://www.benzinga.com/stock/VWAPY#OTC">VWAPY</a>).
The Consumer Discretionary Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLY#NYSE">XLY</a>) and the Vanguard Consumer Discretionary ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VCR#NYSE">VCR</a>) are two ETFs following this sector.
Some other major stocks in consumer discretionary include Nike (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NKE#NYSE">NKE</a>), Lululemon (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/LULU#NASDAQ">LULU</a>) Starbucks (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SBUX#NASDAQ">SBUX</a>), McDonalds (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MCD#NYSE">MCD</a>), Home Depot (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HD#NYSE">HD</a>) Airbnb (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ABNB#NASDAQ">ABNB</a>) and Booking Holdings (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BKNG#NASDAQ">BKNG</a>).
Now Read: <a href="https://www.benzinga.com/general/sports/23/10/35168508/sports-world-responds-to-israel-crisis-nfl-player-pleads-please-get-my-parents-home">Sports World Responds To Israel Crisis: NFL Player Pleads &#8216;Please Get My Parents Home&#8217;</a>
Photo: Shutterstock

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Select Sector SPDR-Consumer Discretionary

Iran's Involvement In Israel-Hamas Conflict Is Key For The Future Of US Inflation

The U.S. and Iran completed a prisoner swap that could anticipate improving relations between the two nations.
The deal, which freed 10 people — five Iranians and five Americans — also unlocked $6 billion in oil funds that the U.S. was holding from the Middle-Eastern nation.
Positive U.S.-Iran relations emerged during the post-war years but quickly deteriorated after the Iranian Revolution, which overthrew the last royal dynasty in 1979 and established the current Islamic Republic of Iran. By 1980 the two countries had ceased formal diplomatic relations.
The decades that followed were conflict-filled as the U.S. launched a long campaign of military intervention in the Middle East. The last decade was marked by U.S.-led pressure to limit Iran's nuclear weapons program through economic embargoes and sanctions which pressed heavily on the oil industry.
Iran's nuclear program: Iran is currently not known to possess any nuclear weapons but is publicly aiming for their development. The construction of uranium enrichment facilities beginning in the early 2000s has been a consistent cause of concern for the West.
Since 2015, the U.S. has been involved in efforts to oversee the dismantlement of Iran's nuclear weapons program through an initiative led by President Barack Obama, which leveraged lifting some sanctions in exchange for the deal. President Donald Trump pulled the U.S. from the agreement in 2018 leading Iran to boost its uranium enrichment program and launching the two countries into new military tensions.
Iran's involvement in the <a href="https://www.benzinga.com/topic/russia-ukraine-war">Ukraine war</a> has also raised concern for NATO powers as the country quickly became one of Russia's closest allies after Moscow was cut off from the West. 
Dozens of Russia-controlled, Iran-made fighter drones were spotted on the Ukrainian front. <a href="https://foreignpolicy.com/2023/01/05/iran-russia-drones-ukraine-war-military-cooperation/#cookie_message_anchor">According</a> to Foreign Policy, the two countries are deepening ties for mutual benefit and could become powerful allies in overcoming many of the sanctions imposed by the West.
Read Also:<a href="https://www.benzinga.com/news/23/09/34465170/lindsey-graham-blasts-us-iran-prisoner-release-deal-that-will-unfreeze-6b-in-frozen-funds-dollars-wi"> Lindsey Graham Blasts US-Iran Prisoner Release Deal That Will Unfreeze $6B In Frozen Funds: &#8216;Dollars Will Now Flow To The Ayatollah&#8217;</a>
Prisoner release and oil money: In this context, the diplomatic success story of a prisoner swap could mean an opening up of new talks between the U.S. and Iran.&nbsp;
"As we welcome home our fellow citizens, I once more remind all Americans of the serious risks of traveling to Iran. American passport holders should not travel there," said President Joe Biden in a speech following the prisoners' release.
Adding to the prisoners, the U.S. agreed to unfreeze $6 billion in Iran's name which was held in South Korea. The money came from the purchase of Iranian oil by the Asian country in 2018, which became stuck after Trump increased sanctions on Iran in 2019, The Washington Post <a href="https://www.washingtonpost.com/national-security/2023/09/18/us-iran-prisoner-exchange/">reported</a>. Republican lawmakers recently <a href="https://www.benzinga.com/news/23/08/33998105/top-house-republicans-raise-alarm-over-bidens-6b-iran-deal">expressed discontent with unfreezing the funds</a>.
Iran won't be allowed to use the capital for sanctioned goods, which include weapons, and its expenditure will be overseen by the U.S. government to make sure it&#8217;s used to purchase resources like food or medicine.
Impact on the oil industry: As part of a long list of U.S. sanctions that have accumulated since 1979, U.S.-based companies are barred from investing in Iran's oil industry.
In 2019, former Secretary of State Mike Pompeo announced that the U.S. would begin imposing sanctions on Chinese companies importing Iranian oil. Iran maintains close commercial ties with China, which remains its largest trading partner over the last decade with bilateral trade amounting to $15.8 billion in 2022.&nbsp;
<a href="https://www.benzinga.com/news/23/09/34195070/us-china-tensions-likely-to-persist-as-chinese-president-xi-may-skip-g20-summit-biden-says-disappoin">Tensions between the U.S. and China</a> have been on the rise in recent years over <a href="https://www.benzinga.com/news/23/09/34187818/xi-jinpings-mouthpiece-warns-us-of-storm-of-lethal-consequences-over-taiwan-support-overstepped-a-re">issues concerning the sovereignty of Taiwan</a>, conflicting geopolitical influence and the domination of <a href="https://www.benzinga.com/markets/asia/23/06/33050727/the-us-is-trying-to-weaken-chinas-semiconductor-industry-heres-what-china-is-doing-to-fight-back-in">key technological sectors including AI and semiconductors</a>.
Earlier this month, the U.S. seized 1 million barrels of crude oil from a Greek tanker owned by a company that was declared guilty of smuggling sanctioned Iranian oil.
During his presidential campaign, Biden vowed to renew the lost nuclear deal with Iran. While talks have been slow, renewing the deal would naturally involve stepping back on several of the sanctions imposed by the Trump administration.
Releasing sanctions on Iranian oil could impact the energy industry by pumping more oil into the system. Iran is an OPEC member and the 14th largest oil exporter by official numbers, though it&#8217;s believed the country exports a lot more oil through unofficial means.
In 2021, Iran accounted for 24% of oil reserves in the Middle East and 12% in the world, according to the U.S. Energy Information Administration.
If U.S.-Iran talks improve and the countries return to talks of a new nuclear deal, the U.S. would remove sanctions, potentially impacting oil and energy ETFs. These include:
<ul>
<li>iShares U.S. Oil &amp; Gas Exploration &amp; Production ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/IEO#BATS">IEO</a>)</li>
<li>ProShares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>)</li>
<li>Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>)</li>
<li>iShares US Oil Equipment &amp; Services ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IEZ#NYSE">IEZ</a>)</li>
</ul>

Read Next:<a href="https://www.benzinga.com/general/23/09/34696904/dire-consequences-for-billions-opec-blasts-ieas-fossil-fuel-demand-forecast-warns-of-energy-chaos-on"> Dire Consequences&#8217; For Billions: OPEC Blasts IEA&#8217;s Fossil Fuel Demand Forecast, Warns Of &#8216;Energy Chaos&#8217; On Unprecedented Scale — 3 Top Oil Stocks From Wall Street</a>

\Photo: Unsplash

iShares Dow Jones US Oil Equipment & Services Index Fund

A Prisoner Exchange With Iran Could Impact The Oil Sector: Here's How

Crude oil has gained five weeks in a row, almost undetected by investors who are completely focused on the stock market surge fueled by AI stocks and the <a href="https://www.benzinga.com/economics/macro-economic-events/23/07/33441488/feds-favored-inflation-gauge-cools-to-2-year-lows-strong-spending-keeps-fed-rate-">significant reduction in inflation.</a>
Such a winning&nbsp;stretch has not occurred in the oil market in over a year and a half, with the most recent instance being eight weeks of advances between December 2021 and February 2022.
On Friday, the West Texas Intermediate (WTI) crude oil surpassed the $80-per-barrel milestone, reaching levels not seen since April 19, 2023.
After falling as much as 45% between mid-June 2022 and mid-June 2023, oil prices have rebounded strongly this month.
Crude has risen by 14% month to date, currently boasting the second-best monthly performance in 2023, only behind January&#8217;s 16%, with one more session to go.
<h2 class="wp-block-heading">Chart: WTI Prices Mark Fifth Week Of Gains In A Row, Rising Above $80 A Barrel </h2>
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="822" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/28152943/CL1_2023-07-28_21-29-28_868ff-1024x822.png" alt="" class="wp-image-77291" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/28152943/CL1_2023-07-28_21-29-28_868ff-1024x822.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/28152943/CL1_2023-07-28_21-29-28_868ff-300x241.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/28152943/CL1_2023-07-28_21-29-28_868ff-768x616.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/28152943/CL1_2023-07-28_21-29-28_868ff-1536x1233.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/28152943/CL1_2023-07-28_21-29-28_868ff.png 1540w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h2 class="wp-block-heading">Why Is Oil Rising?</h2>
Oil prices have risen significantly as a result of a number of variables affecting both supply and demand. 
On the supply side, Saudi Arabia and Russia have made efforts to reduce output, causing oil supplies to tighten. Furthermore, OPEC+ has indicated its willingness to take additional initiatives to assist the oil market. 
On the demand side, Chinese officials have pledged to revive its lagging economy, raising hopes for a spike in domestic petroleum consumption. The U.S. has also pledged to buy Strategic Petroleum Reserve to refill stocks at over 40-year lows. 
Read Now: <a href="https://www.benzinga.com/markets/equities/23/07/33439273/us-stock-futures-signal-rebound-on-tech-earnings-support-analyst-tells-why-fed-may-not-start-cut">Stocks Surge, Tech Rallies On Strong Earnings, Inflation Softens: What&#8217;s Driving Markets Friday?</a>
<h2 class="wp-block-heading">5 Oil-Linked ETFs To Track Crude Gains</h2>
<ul>
<li>United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) &#8211; Description: The United States Oil Fund ETF seeks to track the price movements of WTI crude oil, providing investors with direct exposure to the oil market without the complexity of owning a physical barrel.</li>
</ul>
<ul>
<li>Energy Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLE#NYSE">XLE</a>) &#8211; Description: The Energy Select Sector SPDR Fund ETF seeks to replicate the performance of the energy sector in the S&amp;P 500 Index. It holds&nbsp;major U.S. energy corporations involved in a variety of operations such as oil and gas exploration, production, refining and distribution. &#8211; Major holdings: Exxon Mobil Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>), 21.2%; Chevron Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVX#NYSE">CVX</a>), 18.5%. &#8211; Total return (%) year to date: -1.4% &#8211; Total return (%) last month: 8.6% </li>
<li>VanEck Oil Services ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/OIH#NYSE">OIH</a>) &#8211; Description: The VanEck Oil Services ETF, which targets oil services companies, invests in companies that provide drilling, equipment, and support services to the oil sector. It may profit from increased oil sector activity and demand. &#8211; Major holdings: Schlumberger N.V. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SLB#NYSE">SLB</a>), 19.9%; Halliburton Company (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HAL#NYSE">HAL</a>),11.1%; Baker Hughes Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BKR#NYSE">BKR</a>), 8.8%. </li>
<li>Proshares Ultra Bloomberg Crude Oil (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) &#8211; Description: Proshares Ultra Bloomberg Crude Oil is a leveraged ETF that seeks to track&nbsp;the Bloomberg WTI Crude Oil Subindex by providing twice the daily return. It is appropriate for investors seeking increased exposure to crude oil price swings, but it is riskier due to its leverage. </li>
<li> Direxion Daily S&amp;P Oil &amp; Gas Exp. &amp; Prod. Bull X2 Shares (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GUSH#NYSE">GUSH</a>) &#8211; Description: The Direxion Daily S&amp;P Oil &amp; Gas Exp. &amp; Prod. Bull X2 Shares ETF, which is leveraged at twice the daily return of the S&amp;P Oil &amp; Gas Exploration &amp; Production Select Industry Index, is intended for investors who want a boost in their exposure to the oil and gas exploration industry. Photo: Shutterstock</li>
</ul>

GUSH

Oil Prices Hit $80, Sparking 5-Week Winning Streak: 5 Must-Watch Oil ETFs To Ride The Wave

The Chinese are back in the air.
As the world's second-largest economy recovers from the sudden <a href="https://www.benzinga.com/markets/asia/22/12/30198883/china-to-open-borders-drop-covid-19-restrictions-what-you-need-to-know">opening of its zero-COVID policies</a> late last year, air travel in the country is ramping up quickly.
Domestic and international flights in China have been shooting up since January, and they're getting very close to pre-pandemic levels.
Last week, the amount of active flights in China reached an average of 13,500 a day, equal to levels of the same week in 2019, <a href="https://www.airportia.com/flights-monitor/?country=CN">according</a> to air survey data site Airportia.
Total miles flown are about 10% below the same week in 2019, but dramatically above levels seen in April of 2020 and 2022, when lockdowns put in place by the Chinese government were at their strictest.
Last year, the three largest Chinese air carriers lost about $5 billion each due to hard zero-COVID policies, according to Reuters.
Now the tables are turning. While there have been only about 67,000 international flights to or from China this year, the country has already registered more than 1,2 million domestic flights.&nbsp;
The collective 1,341,750 flights mark a 71% increase from last year's levels
<h3 class="wp-block-heading">Impact On Global Oil Prices</h3>
China's return to commercial air travel could have an effect on the price of global commodities associated with air travel.
The oil supply chain is facing an array of challenges in the coming years. While gas prices in the U.S. <a href="https://www.benzinga.com/news/23/04/31941906/gas-prices-possibly-peaked-short-term-long-term-pump-prices-could-rise-as-us-shifts-to-evs">have apparently reached their short to medium-term peak</a>, cuts in oil production by OPEC+ countries <a href="https://www.benzinga.com/news/23/04/31624195/opec-just-announced-oil-output-cuts-in-a-surprise-move-heres-how-it-could-really-affect-you">are beginning to weigh on global oil prices</a>.
A hike in demand for oil as the world resumes air travel, and specifically as China leaves lockdown measures behind, can put extra pressure on an industry with increasingly reduced margins, causing prices to spike.
In March, the International Energy Agency raised its estimates for global oil consumption after it became clear that China's reopening was causing its air industry to get back on track.
By the last quarter of this year, global demand for jet fuel and kerosene should be at 94% of the fourth quarter of 2019.
An April report by the IEA put the global rise in oil demand at 2 million barrels a day, pushed in 90% by non-OECD countries of which China represents its most significant part.
In January, 11 analysts told Bloomberg that China is expected to increase its oil consumption at a rate of 800,000 barrels a day, on average. This would take China's oil consumption to a yet unseen historical high.
Oil Stocks: ETFs and companies in the crude oil sector were in the green on Monday at the time of this writing.
<ul>
<li>ProShares Ultra Bloomberg Crude Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) is up 1.9% today.</li>
<li>Invesco DB Oil Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>) is up 1.2%.</li>
<li>Chevron Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVX#NYSE">CVX</a>) is up 1.2%</li>
<li>BP plc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BP#NYSE">BP</a>) is up 0.6% today</li>
<li>Shell PLC (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SHEL#NYSE">SHEL</a>) is up 0.5%</li>
<li>Hess Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HES#NYSE">HES</a>) is up +0.65%.</li>
<li>Marathon Petroleum Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MPC#NYSE">MPC</a>) is up +1.6%</li>
<li>Phillips 66&nbsp; (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PSX#NYSE">PSX</a>) is up 0.5%.</li>
<li>Exxon Mobil Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>) is up 2.2%. Pexels picture by Pixabay.</li>
</ul>

Asia

Travel

China's Sudden Rise In Air Travel Could Add Extra Pressure On Global Oil Demand

Gasoline prices might have peaked, and optimists are expecting the trend to continue on a downwards path in the near future.
Late last month, demand for gasoline in the U.S. <a href="https://www.benzinga.com/news/21/03/20403078/us-gasoline-demand-exceeds-2020-levels-for-first-time-report">reached its highest level since before the COVID-19 pandemic</a>. Now, a drop in demand could accompany falling crude oil prices to provide some relief at the pump for drivers across the country.
On Thursday, Andrew Gross, a spokesperson for AAA Gas Prices <a href="https://gasprices.aaa.com/will-drivers-catch-a-break-at-the-pump-soon/">said</a> that the recent surge in oil prices took a break this week. 
"If this oil price trend continues, drivers may see falling gas prices,&#8221; Gross wrote. 
Gasoline analyst Patrick De Haan <a href="https://twitter.com/GasBuddyGuy/status/1649039972794597376">said</a> on Friday, he's "optimistic and hoping that [gas prices] have peaked." 
The price of a barrel of crude oil reached its lowest level since early April on Friday, at $78.
Crude oil prices <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/04/31640827/oil-prices-surge-following-opec-production-cut-analyst-unveils-5-top-oil-stock-pick">had spiked in early April</a> after the group of OPEC+ countries <a href="https://www.benzinga.com/news/23/04/31624195/opec-just-announced-oil-output-cuts-in-a-surprise-move-heres-how-it-could-really-affect-you">announced a surprise cut</a> in production.
Gasoline inventories <a href="https://ycharts.com/indicators/us_ending_stocks_of_gasoline#:~:text=Basic%20Info,4.12%25%20from%20one%20year%20ago.">are also improving</a> from their yearly low reached last week.
The national average for a gallon of regular gas was $3.68 on Friday, higher than last month&#8217;s figure of $3.43 but significantly lower than the year-ago price of $4.12.
<h3 class="wp-block-heading">The Future Is Not As Bright For Oil Prices In The Long Run</h3>
Gasoline prices in the U.S., however, are expected to rise in the long-term, <a href="https://www.bloomberg.com/news/articles/2023-04-21/gas-prices-could-rise-as-ev-shift-drives-us-consumption-down?sref=TBDibEcD#xj4y7vzkg&amp;leadSource=uverify%20wall">according</a> to a Bloomberg analysis.
A rise in the use of electric cars is likely to put a dent in the industry's ability to reach 2018's all-time sales record of an average of 392 million gallons of gasoline a day. 2022's average was 369 million gallons per day.
While gasoline consumption in the U.S. is declining, worldwide consumption is rising, which could mean bad news for Americans in what continues to be the world's largest market for gasoline.
According to Bloomberg, as the amount of oil refiners decreases following the drop in demand, the refiners that remain stand to make bigger margins from the sale of refined oil products.
Read also: <a href="https://www.benzinga.com/news/23/04/31655327/gm-vs-tesla-how-do-q1-ev-sales-stack-up">GM Vs Tesla: How Do Q1 EV Sales Stack Up?</a>
S&amp;P's Global Oil Index, which follows the performance of 120 of the largest, publicly-traded companies engaged in oil and gas exploration, extraction and production, is down 0.7% on Friday.
ETFs in the crude oil sector were in the green on Friday.
<ul>
<li>ProShares Ultra Bloomberg Crude Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) was up 2%.</li>
<li>Invesco DB Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DBO#NYSE">DBO</a>)&nbsp; was up 1%</li>
</ul>
Big company stocks in the oil industry, however, were trading lower at the time of publication Friday.
<ul>
<li>Chevron Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVX#NYSE">CVX</a>) was down 0.4%.</li>
<li>BP plc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BP#NYSE">BP</a>) was down 1%.</li>
<li>Shell PLC (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SHEL#NYSE">SHEL</a>) was down 0.7%.</li>
<li>Hess Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HES#NYSE">HES</a>) was down 0.5%.</li>
<li>Marathon Petroleum Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MPC#NYSE">MPC</a>) was down 1.7%.</li>
<li>Phillips 66 (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PSX#NYSE">PSX</a>) was down 0.9%.</li>
</ul>
<ul>
<li>Exxon Mobil Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>) was the exception to the group, up 0.5%, as <a href="https://www.benzinga.com/markets/equities/23/04/31910197/as-exxon-mobil-southwest-airlines-gear-up-for-earnings-next-week-heres-a-look-at-options-market-">investors anticipate the release of the company&#8217;s Q1 earnings</a> next week.</li>
</ul>
Now Read:<a href="https://www.benzinga.com/etfs/specialty-etfs/23/04/31935102/clock-ticking-us-to-begin-refilling-strategic-petroleum-reserve-this-fall-fueling-surge-in-oi"> Clock Ticking: US To Begin Refilling Strategic Petroleum Reserve This Fall, Fueling Surge In Oil Prices</a>
Photo: Unsplash

Gas Prices Possibly Peaked Short-Term; Long-Term Pump Prices Could Rise As US Shifts To EVs

As the balance of power between China and the U.S. continues to shift, heads of state across the globe are making choices to either steer away or get closer to each of the world's two largest economies.
In South East Asia and the Middle East, a trend to reduce reliance on the U.S. and a decades-old dependence on the U.S. dollar is gaining traction, as Saudi Arabia and ASEAN countries propose new measures.
<h3 class="wp-block-heading">Asian Countries Want Out Of The Dollar Dependence</h3>
On Tuesday, Malaysia's Prime Minister Anwar Ibrahim said that China is open to talks on the creation of an Asian Monetary Fund, in an effort to gain independence from the U.S.-led International Monetary Fund.&nbsp;
The U.S. is the largest financial contributor to the IMF, as well as the largest voting bloc, which makes the international body subject to the U.S. domestic interests, as it holds effective veto power over many of the fund's decisions.
"There is no reason for Malaysia to continue depending on the dollar," the prime minister told the Malaysian parliament on Tuesday.
Anwar resurfaced the idea of an Asian Monetary Fund at the Boao forum in the Hainan province of China last week, <a href="https://www.bloomberg.com/news/articles/2023-04-04/malaysia-china-to-discuss-asian-fund-to-cut-dollar-dependency">reported</a> Bloomberg.
The fund was first proposed by the Japanese government during the 1997 Asian financial crisis, but was never implemented.
Recent Fed policies on hiking interest rates have caused the U.S. dollar to strengthen in the global market. This is causing pain in countries that rely on dollar prices for international commerce, as is the case for many in the Southeast Asia region.
Last week, a meeting of ASEAN finance ministers and central bank governors had the issue of reducing dependency on the U.S. dollar, euro, yen, and British pound from financial transactions at the top of its agenda.
The Association of Southeast Asian Nations, is a political and economic union composed of 10 countries in Southeast Asia, including Malaysia, Indonesia, Thailand and the Philippines. The meeting highlighted the need to move to a local currency transaction scheme.
Also Read: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/04/31685581/inflation-is-about-to-plummet-wall-street-firm-says-heres-when-things-should-get-ba">Inflation Is About To Plummet, Wall Street Firm Says: Here&#8217;s When Things Should Get Back To Normal</a>
The Global X FTSE Southeast Asia ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ASEA#NYSE">ASEA</a>), which follows the FTSE ASEAN Index, tracking the performance of companies from Indonesia, Philippines, Vietnam, Malaysia, Thailand and Singapore, is up 3.4% in the past month and over 9% in the last 6 months.
In the meeting, Indonesian President Joko Widodo urged his counterparts to gradually stop using foreign payment systems, including U.S.-based Visa Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/V#NYSE">V</a>) and Mastercard Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MA#NYSE">MA</a>).
Moving away from Western payment systems is necessary to protect transactions from "possible geopolitical repercussions," Widodo said, according to an official <a href="https://www.aseanbriefing.com/news/asean-finance-ministers-and-central-banks-consider-dropping-us-dollar-euro-and-yen-indonesia-calls-for-phasing-out-visa-and-mastercard/">report</a>.
Out of the 10 countries in the trade association, only Singapore has instituted sanctions on Russia after its invasion of Ukraine.  
Widodo said that countries in the region need to become protected from the consequences of financial sanctions by the U.S. and the European Union on Russia.
<h3 class="wp-block-heading">Saudi Arabia's Crown Prince Doesn't Care About Pleasing The U.S. Anymore</h3>
Late last year, Saudi Arabia Crown Prince Mohammed bin Salman reportedly told associates that he was no longer interested in pleasing the U.S., as per a Wall Street Journal <a href="https://www.wsj.com/articles/saudi-arabias-oil-production-cuts-reflect-cost-of-reshaping-economy-7fb6e09c">report</a>. He said anything his country would do for the Western nation would need a favor in return.
On Sunday, a surprise OPEC+ announcement<a href="https://www.benzinga.com/news/23/04/31626681/u-s-decries-surprise-oil-cuts-by-saudi-opec-amid-uncertain-market-conditions-not-advisable"> to cut oil production by about 1.2 million barrels</a> proved that the prince's comments are more than words thrown to the wind.
Saudi Arabia is the largest oil producer in OPEC. The decision, which included a vote from Russia, and other OPEC-associated countries, garnered a response from the Biden administration, which deemed the cuts "not advisable."
Oil-focused ETFs reacted positively to the news of a cut in oil production, which is likely to bring oil prices up.
<ul>
<li>The United States Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) jumped on Monday after the announcement and is up 8.4% in 5 days.</li>
<li>The broader Vanguard Energy Index Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VDE#NYSE">VDE</a>) also spiked on Monday and is now 4% higher in the past 5 days.</li>
<li>ProShares Ultra Bloomberg Crude Oil ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCO#NYSE">UCO</a>) is up 14% in 5 days following a major spike on Monday.</li>
</ul>
Now Read: <a href="https://www.benzinga.com/news/23/04/31684804/jim-cramer-trashes-palantir-c3-ai-says-they-arent-even-real-companies">Jim Cramer Trashes Palantir, C3.Ai, Says They Aren&#8217;t Even &#8216;Real Companies&#8217;</a>

ASEA

Breaking Up With The Buck: Saudi Arabia, Southeast Asian Nations Swipe Left On US Dollar Dependence

Oil prices gave up gains and fell as rising inventories in the US and weak October China imports weighed.

Oil Prices Fall Amid Rising Stocks, Weak China Imports; Market Uncertain Over Impact Of Trump's Win

US equity futures extended their post-election gains, as S&P futures traded near session high with both Tech and small caps outperforming as the dollar eased and yields were flat, as traders continued to map out Trump's return to the White House.

S&P Futures Extend Gains As Trump Trades Cool

Crude oil prices bounce as market weighs potential Trump policy impacts

The story isn't just about the rally itself but also about the remarkable volatility collapse paving the way for these gains.

Perception Points To Smooth Sailing Into Year-End

In this video, Ira Epstein reviews the activity in the Financial Markets after the day that just ended, Thursday, November 7.

Financial Markets Report For Thursday, Nov 7

Commodity Roundup: Oil set for weekly gain; China stimulus plans in focus

The Dow Jones Index (US30) closed Thursday at the opening price. The S&P 500 Index (US500) gained 0.74%. The NASDAQ Technology Index (US100) closed positive 1.54%.

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