Commodities
Home›Commodities›Energy›Brent rises as Middle East demands and attacks lift cr…
Brent rises as Middle East demands and attacks lift crude risk premium
Oil prices are supported by the backdrop of Middle East escalation risks, including drone attacks on oil infrastructure in Saudi Arabia and Libya, and spillover from intensified strikes tied to Ukraine-Russia fighting, according to Action Forex.
Brent crude has been moving higher as geopolitical tensions in the Middle East intensify and talks over reopening the Strait of Hormuz appear less certain, Action Forex reports. The outlet says the focus has shifted toward new demands rather than commitments, with Iran asking for reparations, troop withdrawal by the US, lifting sanctions, and release of frozen assets, while the US has outlined its own conditions.
Action Forex also links the dollar to the oil backdrop, noting the US dollar recovered from losses after the jobs report as traders repositioned ahead of key US inflation data. The piece cites expectations for consumer prices to rise 0.1% and core CPI 0.2% month over month, which would point toward progress toward the Fed’s target and could reduce the odds of rate hikes.
The energy price move is further driven, the outlet says, by drone attacks on oil infrastructure in Saudi Arabia and Libya that raise the risk of a US response. It adds that the latest strength in Brent also reflects greater intensity in Ukraine’s attacks on Russian oil refineries, which is pushing up petrol and diesel prices and increasing demand for crude, lifting oil futures.
On the supply outlook, Action Forex highlights bullish conditions for crude including the possibility of continued Strait of Hormuz disruption, issues with alternative routes through the Red Sea, gradual Chinese demand growth, and reduced global stocks. It also points to Capital Economics, which expects North Sea crude to trade in a range of $80 to $90 per barrel if a Strait of Hormuz deal is not reached.
Latest closeWTI crude $82.30 ▲5.3%|Brent $87.85 ▲5.2%