|

Brent: Supply shock drives sustained price strength – Commerzbank

Commerzbank analysts highlight that Brent crude Oil has surged above USD100 as Middle East conflict triggers major supply disruptions. The International Energy Agency estimates an unprecedented hit to global Oil supply and exports, while the US Energy Information Administration now sees retail gasoline prices only returning below pre-conflict levels by late 2027, reinforcing concerns about prolonged supply-led inflation.

War-driven disruption underpins Oil rally

"The main theme overnight was risk-off, as oil prices continued to rise amid signs of worsening supply disruptions. Brent crude oil closed above USD100 for the first time since August 2022."

"President Trump and Iran’s new supreme leader, Mojtaba Khamenei, both struck defiant tones, which caused a further spike in oil prices. President Trump wrote in a social media post that stopping Iran from having nuclear weapons is “of far greater interest and importance to me, as President”."

"The International Energy Agency (IEA) said the “the war in the Middle East is creating the largest supply disruption in the history of the global oil market”, hitting 7.5% of global supply and an even bigger swath of exports."

"The IEA estimates that the war will slash global oil supply by 8 million barrels a day this month, or almost 250 million barrels in total."

"In its latest Short-Term Energy Outlook, the US Energy Information Administration raised its fuel price forecast. It now expects retail gas prices to only fall below the pre-conflict level of USD2.94 per gallon by the end of 2027, sparking fears of supply-led inflationary pressures."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD hangs near three-week low, below 0.6950 as traders await US NFP report

AUD/USD hits a three-week low during the Asian session on Friday as the RBA’s dovish shift and a rout in equity markets weigh on the risk-sensitive Aussie. However, the recent slump in US bond yields to a two-month low keeps US Dollar bulls on the back foot and limits losses for the currency pair as traders look to the US NFP report for a fresh impetus.

USD/JPY bounces off three-week low; keeps the red near 157.65 as focus remains on US NFP

USD/JPY bounces off the weekly low set during the Asian session, as bears turn cautious ahead of the US NFP report due later this Friday. The upside seems limited as the recent slump in US bond yields and hopes of Iran war de-escalation undermine the US Dollar. Moreover, a hawkish BoJ and intervention risks support the Japanese Yen, capping the pair.

Gold loses the grip; $4,000 comes next on the downside

Gold sets aside two daily advances in a row on Friday, opening the door to a potential test of the key $4,000 mark per troy ounce. The precious metal’s retracement follows a decent improvement in the sentiment surrounding the US Dollar, solid NFP data and higher US Treasury yields across the board.

Democrats win House and Senate in US midterms: Why isn’t all bad news for crypto

The biggest story this week was Tuesday’s US midterm elections, which saw Democrats win control of both the House and the Senate in a clear blue wave. This political shift in the US has triggered sharp price swings across the cryptocurrency market.

Week ahead – Inflation and geopolitics in focus as US political landscape shifts

Post-midterm election euphoria fizzles out as risk aversion prevails. US CPI, PPI and Fedspeak on the radar as Fed hike bets remain supported. Oil retreat pauses on mixed hopes about the ongoing conflicts.

US Dollar breaks below 101.50 as Democrats sweep Congress
The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.