Oil: Middle East tensions keep Brent elevated – Danske Bank

FXStreet Insights Team FXStreet

Danske Research Team underlines that escalating US–Iran tensions in the Strait of Hormuz are sustaining volatility in Oil markets. Brent crude trades over 110 USD/bbl, reflecting persistent supply concerns. They warn that mounting geopolitical risks are testing a fragile ceasefire and increasingly threaten inflation, even though earlier ECB's Survey of Professional Forecasters (SPF) forecasts assumed lower Oil prices later in the year.

Brent volatility underscores inflation risks

"Tensions in the US-Iran conflict intensified as Iran launched missile and drone attacks on the UAE, igniting a fire at a petroleum industrial site and prompting the UAE to intercept multiple projectiles. In response, the US reported sinking six Iranian boats in the Strait of Hormuz."

"Amidst these developments, US forces reportedly cleared paths for two vessels through the strait, with Mærsk confirming its US-flagged Alliance Fairfax transited under military protection. Tehran condemned the move as a violation of the ceasefire."

"Energy markets remain volatile, with Brent crude prices at 113 USD/bbl, reflecting persistent supply concerns. Mounting tensions are testing the fragile ceasefire, with risks to inflation becoming more pronounced."

"[ECB's SPF] Forecasts assumed USD oil prices of 94 in Q2, 85 in Q3, and 80 in Q4, while Brent oil prices fell sharply during the survey period, dropping from 120 USD/bbl on 31 March to 90 USD/bbl by 8 April."

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

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