Crude Down Slightly, Geopolitical Tensions Increase Market Uncertainty
Oil prices are slightly lower during APAC trading today but have held onto most of Monday’s gains driven by increased geopolitical risks. WTI is down 0.4% to $86.03/bbl after reaching a peak of $86.53 earlier, while Brent is also 0.4% lower at $87.82 down from a high of $88.21. The USD index is flat.
- The impact of events in Israel on oil flows is currently highly uncertain and may result in a risk premium added to oil prices. Iran denies any involvement in the Hamas attack but its possible connection potentially adds to market risks. If sanctions are increased on the country, Iran could close the Strait of Hormuz which sees 17mbd of crude pass through. It has helped to increase global supply this year as OPEC+ cut output.
- Later Fed’s Perli, Bostic, Waller, Kashkari and Daly speak. There is also US NFIB small business optimism and NY Fed 1-yr inflation expectations. The IMF’s World Economic Outlook is published.