Global Oil Supply at Risk: Crude Prices Soar

Middle East tensions raise crude oil prices, sparking fears of supply disruptions and global geopolitical consequences.

Crude oil prices surged in response to escalating tensions in the Middle East, with traders closely monitoring regional developments. Reports of ongoing conflicts have kept the market on edge, leading to concerns about potential disruptions in global oil supply. Intensifying military buildup raises market fears as scrutiny grows, heightening concerns about a possible squeeze in the available supply.

US Treasury Secretary Janet Yellen’s comments about not ruling out further sanctions against Iran added to the apprehension surrounding energy availability. As of the latest update, the WTI futures contract hovers near US$87.70 per barrel, while the Brent contract is around US$90.90 per barrel.

Amidst the uncertainty, haven assets experienced mixed movements. After a significant rally on Friday, gold eased slightly, falling below US$1,920 per ounce. The Swiss Franc maintained its strength from the previous week, trading near 0.9000 against the US Dollar and reaching a 13-month peak against the Euro at around 0.9480.

Global Oil Supply at Risk – Crude Prices Soar

The US Dollar softened in the Asian session, with the Australian and New Zealand Dollars recovering from losses incurred at the end of the previous week. The New Zealand election outcome is pending, causing a shift in political dynamics. In the coming weeks, a coalition government must form. APAC equities faced pressure in the equity markets, with Japan’s Nikkei 225 index down over 1.50%. Futures indicated a steady start for European and US equity indices.

Looking ahead, market participants are closely monitoring sentiment data from manufacturers in Canada and the US. Additionally, commentary from central banks, including the Bank of England (BoE), European Central Bank (ECB), and Federal Reserve, will be pivotal in shaping market sentiment.

The WTI futures contract tested resistance levels between 87.76 and 88.19 on the technical front but struggled to surpass them. These levels continue to pose resistance. Resistance at 93.64 and 95.03 may pose further challenges. Support levels are anticipated near the breakpoints in the 84.70 – 84.90 range, followed by prior lows at 82.31 and 81.50.

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