Oil Prices Rise as Geopolitical Concerns Loom
In a tumultuous market, oil prices saw a slight increase on Tuesday following a recent dip. Investors remained on edge as they evaluated the potential impact of geopolitical tensions in the Middle East, as reported by Reuters.
At 9:34 a.m. Saudi time, global benchmark Brent crude oil futures climbed 18 cents to reach $87.18 a barrel, while US West Texas Intermediate crude futures also rose by 16 cents to hit $82.06 a barrel.
Despite a 29-cent drop in both benchmarks in the previous session, indications suggested that the recent conflict between Israel and Iran had not significantly disrupted oil supplies in the region.
Sugandha Sachdeva, the founder of Delhi-based research firm SS WealthStreet, noted, “The unwinding of geo-political risk premium has dented crude oil prices recently as supply was not disrupted meaningfully.” However, she emphasized that the shifting geopolitical landscape continues to play a crucial role in dictating oil prices.
ANZ analysts also expressed similar sentiments, pointing out the US approval of new sanctions on Iran’s oil sector and the EU’s decision to expand sanctions on Iran following recent attacks on Israel.
As uncertainty looms, the ANZ analysts stated in a podcast, “The geopolitical backdrop is still very fraught with so many risks at the moment, so clearly we’re going to see a lot of volatility until there’s a lot more clarity around it.”
Amidst the chaos, Israeli troops made a surprise raid into an eastern section of Khan Younis, causing residents in the southern Gaza Strip to flee once again.
Looking ahead, investors are eagerly awaiting the release of US gross domestic product figures and March personal consumption expenditure data later this week to gauge the direction of monetary policy.
A preliminary Reuters poll of analysts indicated expectations of an increase in US crude oil inventories last week, while refined product stockpiles likely saw a decrease.
Sachdeva highlighted that various factors such as sticky US inflation figures, hawkish statements from key Fed officials, and rising US inventories are all contributing to constraints on crude oil price growth.