Geopolitical risks grow – ING
The oil market spiked in early morning trading on media reports suggesting that Israel could be planning a strike on Iranian nuclear facilities, ING’s commodity analysts Warren Patterson and Ewa Manthey note.
Oil market to price in a larger geopolitical risk premium
"The news, based on US intelligence, may signal a significant escalation, prompting the oil market to price in a larger geopolitical risk premium for the region. Such an escalation would not only put Iranian supply at risk, but also in large parts of the broader region."
"However, with NYMEX WTI up only a little over 2% at the time of writing, it seems the market is not entirely convinced by these reports -- at least for now. Iran currently produces around 3.35m b/d of crude oil. There are indirect nuclear talks between the US and Iran, which, if successful, could give the market further upside. However, these talks appear to be running out of steam."
"Numbers overnight from the American Petroleum Institute show US crude oil inventories increased by 2.5m barrels over the last week. Stock changes in refined products were more constructive, with gasoline and distillate inventories falling 3.2m barrels and 1.4m barrels, respectively. Inventory data continues to suggest a tightening middle distillate market. Energy Information Administration (EIA) data last week already showed that US distillate stocks are at their lowest in 20 years for this time of year."
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FXStreet Insights Team
FXStreet
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