Crude Rises On Increased Geopolitical Risks

Oil prices rose strongly on Friday with the situation in the Middle East escalating. Israel appears to be preparing for a ground offensive into Gaza with reports of some small groups already going in and meanwhile Iran’s foreign minister said that “the hands of all parties in the region are on the trigger” if Israel doesn’t stand down, according to The Economist. Oil prices are likely to be very sensitive to any escalation of the conflict outside of Israel.

• ANZ estimates that there is a risk premium of $5-10/bbl currently priced in.
• Brent rose 5.8% on Friday to $90.98/bbl, close to the intraday high. It trended up throughout the European/NY sessions. It broke through resistance at $89.96, 20-day EMA, opening $95.35, September 28 high and bull trigger. Initial support is $83.84, October 5 low.
• WTI increased 5.8% to $87.72/bbl after a high of $87.83 and have started today lower. Prices were 6% higher on the week. It broke resistance at $86.52 and $91.88, October 2 high, is the next level to watch. Initial support is $83.84.
• Adding to price pressures at the end of the week, the US enforced sanctions against Russia, according to Bloomberg. The action could disrupt up to 20mbd.