Brent: War-linked range trading outlook – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad notes Brent crude has rallied above $91 as the US–Iran Strait of Hormuz standoff persists. Haddad argues crude Oil is driving the war narrative and expects price swings to steer escalation risks. BBH projects Brent staying broadly within a $70–$100 range, with higher Oil also pressuring bond yields and fiscal dynamics.

Crude drives war narrative and ranges

"Brent crude rallied to $91.85 a barrel, its highest level in more than three weeks, as the US-Iran Strait of Hormuz standoff drags on. We continue to see crude oil prices driving the war narrative, with price swings likely to dictate the pace of escalation and de-escalation. That should keep Brent within a broad $70 to $100 range."

"In parrel, the renewed upswing in crude oil price is pushing bond yields higher and worsening already fragile fiscal dynamics. Equity markets are down and USD recovered yesterday’s loss. The risk of further dovish Fed repricing will keep USD rebounds shallow and short-lived."

"This has led some to argue that the dollar is increasingly vulnerable to an equity market correction, as foreign investors unwind their US stock holdings. We disagree. A broad stock market sell-off would simply encourage foreign investors to rotate back into safe-haven Treasuries, underpinning the dollar’s defensive appeal."

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