Oil prices increased on Thursday, driven by heightened fuel demand as Hurricane Milton made landfall in Florida and growing concerns over potential supply disruptions amid escalating tensions between Israel and Iran. Brent crude futures rose 24 cents, or 0.3%, to USD 76.82 per barrel, while US West Texas Intermediate (WTI) futures gained 28 cents, or 0.4%, reaching USD 73.52 per barrel as of 0655 GMT.
Hurricane Milton, the second major storm to impact the US this season, struck Florida’s west coast, generating tornadoes and threatening storm surges. This has led to increased gasoline demand in the region, with about a quarter of fuel stations reportedly running out of supplies, thereby bolstering crude prices.
Compounding these factors are fears of escalating conflict in the Middle East. Israeli Defence Minister Yoav Gallant recently warned that any strike against Iran would be “lethal, precise, and surprising.” US President Joe Biden held a conversation with Israeli Prime Minister Benjamin Netanyahu regarding Israel’s stance on Iran, emphasising caution against targeting oil facilities. Analysts at ANZ noted that while Biden is urging restraint, there is increasing concern about Israel’s actions going unchecked by its allies.
Despite these geopolitical tensions, demand forecasts are being closely monitored. The US Energy Information Administration (EIA) recently downgraded its 2025 demand forecast due to slowing economic activity in China and North America. EIA data showed that crude inventories rose by 5.8 million barrels to 422.7 million last week, surpassing analysts’ expectations but reflecting a smaller increase than earlier estimates by the American Petroleum Institute.
Nevertheless, analysts at JP Morgan reported a surge in oil demand this month. In the US, gasoline consumption increased by 800,000 barrels per day week-over-week. Flight activity in Asia has also rebounded after disruptions from recent typhoons, with daily flights in China reaching an eight-week high. As travel-related demand wanes, attention is now shifting to potential weather-driven increases in fuel demand in the upcoming weeks.