Prices Hold Friday’s Gains As Middle East Uncertainty Persists

Oil prices are off their intraday lows to be steady during the APAC session after rising almost 6% on Friday driven by heightened geopolitical risks. Brent is flat but broke above $91 earlier and is currently around $90.91/bbl following a low of $90.18 earlier. WTI is also flat at $87.70 after falling to $87.07. The USD index is down 0.1%.

• ANZ estimated that increased geopolitical tensions in the Middle East have added a $5-10/bbl risk premium to oil. Bloomberg is reporting that the US has been talking with other countries in the region in an attempt to prevent the conflict spreading. Such an outcome would drive oil prices higher but the move is only likely to be sustained if there is a disruption to supply. A trip by US President Biden to Israel is being explored.
• Brent timespreads are wider than a month ago signalling that the market remains tight, according to Bloomberg. Saudi Arabia will be watched closely if there are supply disruptions to see if it will increase its output again after announcing its cuts will continue to end 2023.
• Later the Fed’s Harker speaks on the economic outlook and the ECB’s Lagarde and Panetta attend the Eurogroup meeting and Enria and Tuominen speak. In terms of data, there is only US October Empire manufacturing.