12 April 2024 | FXGT.com
Rising Geopolitical Risks Spark Concerns Over Global Oil Supply Stability
- Oil Price Movement: West Texas Intermediate (WTI) crude has spent the week consolidating sideways while holding above the key support at $85.00 per barrel, reflecting ongoing uncertainties and the potential for fluctuating oil supply dynamics.
- Geopolitical Risks: The geopolitical landscape remains troubled with risks, especially due to escalating tensions in the Middle East and the Russia-Ukraine conflict. Recent threats by Iran to potentially close the Strait of Hormuz add to the concerns. This strait is a critical global trade route, and any disruption could significantly impact oil markets.
- Middle East Tensions Heighten: Israel is on alert for a possible direct attack from Iran, in response to an alleged Israeli strike on its embassy in Syria. These developments fuel concerns over regional stability.
- Inventory and Output Increases: Global observed oil inventories rose by 43.3 million barrels in February, reaching a seven-month high. The 2024 global oil output is expected to increase by 770,000 bpd to 102.9 million bpd, primarily driven by non-OPEC+ countries and the US.
- Influence of U.S. Crude Inventory Data: The latest EIA report shows a significant build in U.S. crude inventories with a 5.841-million-barrel increase over the previous week, surpassing market expectations and potentially contributing to lower oil prices due to perceived oversupply.
- Inflation Concerns: Despite the increase in prices due to these tensions, WTI Crude Oil is on track for a weekly loss of about 1%, influenced by persistent U.S. inflation concerns which decrease hopes for a Federal Reserve interest rate cut in the near term.
- Market Reaction to Fed Policy and Geopolitical News: As traders assess the implications of U.S. monetary policy and Middle Eastern geopolitical developments, WTI prices remain sensitive to news that could either confirm or alleviate concerns over supply and demand dynamics.
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