Global Oil Prices Rise Amid Middle East Tensions

Oil futures have experienced recent volatility, with Brent slumping under $70 last month on concerns about weak demand, before intensified fighting in the Middle East sent prices soaring 10 percent last week, AFP reported.

According to the news agency, Israel is preparing its retaliation against Iran over its missile attack last week, raising fears of an all-out regional war that could involve strikes on oil facilities.

Reuters reported that oil prices settled more than 3% higher on Monday, with Brent surpassing $80 per barrel for the first time since August as the increased risk of a region-wide Middle East war jolted investors out of record bearish positions amassed last month.

Brent crude futures rose by $2.88, or 3.7%, to settle at $80.93 per barrel, added Reuters.

Last week, Brent rose more than 8% and WTI advanced by more than 9% week-on-week, the most in more than a year, after Iran's October 1 missile barrage against Israel raised concerns that the response from Israel would aim at Tehran's oil infrastructure, the UK-based international news agency added.

“If that happens, oil prices could rise by another $3 to $5 per barrel,” Reuters quoted Andrew Lipow, president of Lipow Oil Associates, as saying.

In the context of Nepal, the state-owned oil monopoly – Nepal Oil Corporation (NOC)-- fixes the prices of petroleum products based on the price list provided by its supplier Indian Oil Corporation (IOC).

The IOC last week reduced the price of petroleum products. As a result, NOC also slashed the fuel prices on October 1. The NOC usually adjusts fuel prices fortnightly based on the price list provided by the IOC.

An official of NOC told New Business Age that the tensions in the Gulf region will likely impact the oil price but an increase of $3 per barrel will have minimal effect in Nepal.

The NOC official, on condition of anonymity, also clarified that although India receives fuel from Russia at concessional rate for domestic consumption it supplies oil to Nepal from the Gulf (Middle East). As a result, the fluctuation of fuel prices in the international market will have a direct impact on Nepal.

“There’s nothing to worry about the current situation,” said the official, adding, “However, if the tensions flare up, fuel prices might go up.”

(Updated news with quote from NOC official)