Crude Stronger On Growing Middle East Tensions

Oil prices are up almost 2.5% following continued attacks on shipping in the Red Sea by Houthi rebels. Brent broke through $80 early in NY trading to reach a high of $81.72/bbl, it is now around $81.03. WTI rose 2.5% to $75.43 after a high of $76.18. The move was partially driven by a weaker greenback with the USD down 0.2% since Friday’s close.

• WTI is now down only 1% this month and Brent is flat.
• Oil markets had eased following the initial reaction to the October 7 Hamas attacks on Israel as the conflict looked contained. There are now increasing concerns though that it is spreading in the region with the Iran-backed Houthis firing on shipping in the key Red Sea route and the US striking Hezbollah targets in Iraq, which has boosted oil prices. Rerouting oil and gas shipments also adds to shipping costs.
• Bloomberg is reporting that crude’s implied volatility has fallen in recent weeks and so with many still on holiday liquidity is likely to be thin and EIA and API US inventory data are the only releases of note for the market this week.