|

Oil: Middle East tensions keep Brent elevated – Danske Bank

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.)

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 stabilizes above two-week low/0.6950 as traders await US election results

AUD/USD edges higher in the Asian session on Wednesday, recovering slightly from a two-week low touched on a less hawkish RBA reaction the previous day. Hopes for Iran diplomacy undermine the safe-haven US Dollar and support the currency pair, though the upside remains capped as traders await US midterm election results.

USD/JPY retreats from three-week top, slips below 158.50 amid intervention risks and softer USD

USD/JPY slides below 158.50 in the Asian session on Wednesday, snapping a two-day winning streak to hit a near three-week high the previous day, as intervention risks support the Japanese Yen. Meanwhile, the US Dollar remains on the back foot amid hopes for Iran diplomacy, further weighing on the currency pair as traders brace for some volatility surrounding US midterm election results.


Gold consolidates below $3,950 as Fed hike bets counter softer USD ahead of US election results

Gold struggles to capitalize on the previous day's bounce from sub-$3,900 levels, oscillating in a range during the Asian session on Wednesday as traders brace for short-term market volatility surrounding US midterm election results. Meanwhile, hopes for Iran diplomacy weigh on the safe-haven US Dollar and support bullion, though upside remains capped amid Fed rate hike bets.

Ethereum: US-led selling keeps ETH below $2,309 realized price
Ethereum (ETH) faces pressure near $2,300 on Tuesday as it struggles to recover its realized price. The top altcoin fell below its realized price, or investors' average on-chain cost basis, at $2,309 following the $6.3 billion Binance hack last Thursday.
US Midterms: Can Wall Street rally despite AI debt and credit risks?
Political uncertainty may be coming to an end, but the real question for investors is whether the technology sector can sustain its enormous spending commitments. The US midterm elections are arriving at an interesting moment for financial markets.
The 2% inflation target came from a throwaway remark. It now moves trillions
The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.