Oil prices rose in response to the escalation of the Middle East conflict over the weekend, although the price increase at the beginning of the week was limited. The price of Brent oil rose briefly to $73 per barrel, but then shed its gains again, Commerzbank’s commodity analyst Carsten Fritsch notes.
The impact on oil supply to remain limited
“The start of an Israeli ground offensive in southern Lebanon, which was reported this morning, also had little impact on the price. Apparently, the market does not expect the increased tensions in the Middle East to affect oil supply in the foreseeable future. The killing of the leader of the Shiite terrorist militia Hezbollah by a targeted rocket attack by Israel in Beirut has certainly further intensified tensions in the region.”
“Iran, which supports Hezbollah in Lebanon financially and militarily, has so far avoided announcing a retaliatory attack. It appears that Iran is not interested in a military confrontation with Israel at present. It is also consistent with this that there has not yet been a retaliatory attack in response to the killing of a high-ranking Hamas leader in Tehran at the end of July, for which Israel is being blamed.”
“Provided that there is no direct confrontation between Iran and Israel, the impact on oil supply should remain limited. Consequently, there is no reason to add a larger risk premium to the oil price. The muted reaction of the oil market to the latest events is therefore reasonable. However, this does not mean that a situation cannot arise that would require a reassessment of the situation. The news from the Middle East should therefore continue to be watched closely.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD drops toward 1.0950 on tepid risk sentiment
EUR/USD is seeing a fresh selling wave toward 1.0950 in the European session on Wednesday, as the US Dollar resumes upside amid lingering Chinese economic concerns and the Middle East escalation. The focus now stays on the ECB/ Fed-speak and the FOMC Minutes.
GBP/USD sits at multi-week low below 1.3100, awaits FOMC minutes
GBP/USD is trading close to multi-week lows below 1.3100 in the European trading hours on Wednesday. The US Dollar adds to recent gains amid risk aversion, awaiting the Fed Minutes for a fresh directional impetus in the pair.
Gold price extends losing spell amid upbeat US Dollar ahead of FOMC Minutes
Gold price extends its losing streak for the sixth consecutive trading day on Wednesday. The precious metal has been battered by the upbeat US Dollar, which has strengthened as traders are pricing out another Fed larger-than-usual interest rate cut of 50 bps in their next meeting in November.
BTC on-chain metrics show weakness in institutional demand
Bitcoin price stabilizes around $62,000; a firm close below would suggest a decline ahead. US Spot Bitcoin ETF data recorded an outflow of $58.20 million on Tuesday, while the Coinbase Bitcoin Coinbase Premium Index is falling.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.