Oil Market Reacts to Middle East Tensions

Oil Market Reacts to Middle East Tensions/Reuters

VoM News Desk | April 15, 2024 | 05:06 PM IST | Breaking News | Follow on Google News

Oil Market Reacts to Middle East Tensions

Oil Market Reacts to Middle East Tensions

Global crude oil prices edged lower on Monday as markets gauged the repercussions of Iran’s assault on Israeli military sites. Over the weekend, Iran launched a barrage of missiles and drones at Israeli facilities, sparking fears of wider conflict. Despite causing only minor damage, the attack heightened tensions in the volatile region. Israel, engaged in conflict with Iran-backed Hamas in Gaza, faces escalating geopolitical risks.

Market Analysis and Future Outlook

The International Energy Agency (IEA) warned of heightened volatility in oil markets due to mounting tensions. Traders monitored prices closely as Brent crude and West Texas Intermediate (WTI) contracts fluctuated. While geopolitical tensions drove recent price spikes, factors like US crude stocks and the dollar’s strength tempered gains.

Rahul Kalantri of Mehta Equities highlighted the potential for further volatility if Middle East tensions escalate, disrupting global supply. Brent crude had recently surpassed $90 per barrel amid escalating Israel-Iran tensions.

Iran, OPEC’s fourth-largest producer, plays a significant role in global oil markets. However, OPEC+ output cuts, combined with non-OPEC supply growth, may mitigate price impacts.

Moody’s Analytics forecasted additional price increases, projecting oil prices to reach $95 per barrel post-attack. The firm anticipated a measured Israeli response, potentially easing tensions and reducing risk premiums over time.

Overall, market sentiment remained cautious, with potential for further escalation or de-escalation shaping oil price trajectories.

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