Oil Slips After 3-Day Rally as Middle East War Raises Supply Fears

Oil prices edged lower on October 13, ending three days of gains as traders weighed the widening war in the Middle East against the risk of supply disruptions.

The recent rally had been driven by concerns that the conflict could slow a recovery in oil supply from the region. Both the Middle East and Ukraine are major energy producers, and ongoing fighting in both areas has kept markets on edge [260760][260684].

In the Middle East, renewed violence threatened key oil-producing regions. In Ukraine, continued attacks added further pressure to already strained markets [260672]. Investors are watching closely, as any disruption to supply can push prices higher and affect fuel costs worldwide.

The market fears that supply disruptions could continue. Traders also remain skeptical about an energy ceasefire between Russia and Ukraine [260684].

Oil markets have struggled in recent days to understand how a new "energy ceasefire" between Russia and Ukraine could ease a growing global oil crisis. The Middle East conflict continues to put pressure on fuel supplies [260665].

The uncertainty has extended beyond oil. Gold prices kept their losses on Friday as the growing Middle East conflict raised fears that energy supplies could be disrupted. Those fears could keep inflation high, potentially pushing central banks to raise interest rates. Higher rates make gold less attractive to investors because gold pays no interest [260756].

Oil's rally has also added to the dollar's appeal. Higher crude prices often drive demand for the U.S. currency, which is used to settle global oil trades. The dollar held near an 18-month high while the euro weakened as investors weighed rising energy costs and political uncertainty in Europe [260746].

Markets remain on edge as the conflict continues to affect global energy supplies and broader financial conditions.