Oil up over Middle East tension, OPEC+ supply plan

ISTANBUL

Oil prices edged higher on Wednesday over heightened Middle East tensions as Israel continued to attack Lebanon despite a cease-fire deal and the prospect of OPEC+ extending supply cuts.

The international oil benchmark of Brent crude increased 0.23% to $73.71 per barrel at 10.53 a.m. local time (0753 GMT), up from the previous session's close of $73.54.

The US benchmark West Texas Intermediate also rose by 0.16% to $69.87 per barrel, compared to $69.76 at the close of the prior session.

Tension heightened in the Middle East as the Israeli army continued to strike Lebanon despite a cease-fire agreement that came into effect on Nov. 27.

Lebanese Prime Minister Najib Mikati said Tuesday that diplomatic contacts are underway to halt Israeli violations of the cease-fire and ensure Israel's withdrawal from border towns.

However, Israeli Defense Minister Israel Katz threatened to attack Lebanese state targets if a cease-fire deal with Lebanon collapses.

The Organization of Petroleum Exporting Countries (OPEC) and its allies, known as the OPEC+, will decide their production policy for the early months of 2025 on Thursday. OPEC+ is expected to extend its supply cuts until the end of the upcoming first quarter.

The group has been looking to phase out supply cuts through next year gradually. However, the prospect of a market surplus has pressured oil prices.

Meanwhile, the American Petroleum Institute (API) reported late Tuesday that US commercial crude oil inventories increased by 1.23 million barrels, against market expectations of a 2.06 million barrel drop.

The hike in crude reserves reflected market perceptions of weakening domestic demand in the world's biggest oil consumer, limiting upward price movements.

Official figures from the Energy Information Administration (EIA) are scheduled for later in the day.