Declines in oil prices on world markets
A barrel of West Texas Intermediate crude oil for deliveries on November it costs USD 74.16 on NYMEX in New York, lower by 0.30 percent
Brent on ICE on XII is priced at USD 77.73 per barrel, after a discount of 0.41%.
Oil opens the new week in the red, and the market is waiting for Israel’s possible response to Iran’s missile attack last week.
Iran fired a salvo of ballistic missiles at Israel last Tuesday, and an alarm was sounded throughout the country. Israel’s military said it shot down most of the 180 rockets heading toward the country.
Iran announced that the airstrike was revenge for Israel’s killing of Hamas and Hezbollah leaders. Israel announced its response.
US urges caution in response to Iran’s actions
US President Joe Biden said last week that he would not support any Israeli attack on Iranian nuclear facilities in response to Iranian missile fire and called on Israeli authorities to take “proportionate” action against their regional foe.
When asked whether he would support Israeli strikes on Iranian oil installations, one of the options discussed in the media, Biden did not answer clearly.
“We’re discussing it. I think it would be a bit… never mind,” he said.
Iran’s attack on Israel has intensified concerns in oil markets about a war in the Middle East and triggered a wave of activity in options markets.
Last week, crude oil futures recorded the largest increases in over a year, and on the options market – as analysts point out – the “madness” was even greater.
Investors change strategies in the face of escalating conflict
Hedge funds, commodities consultants and other fund managers scrambled to reverse positions that were still bearish on oil in mid-September on fears that slower economic growth in China and other regions would weigh on demand
for oil at a time when the OPEC+ alliance countries are preparing to increase supplies.
However, the escalation of the conflict in the Middle East has changed everything – now most traders are looking for insurance against a sharp increase in oil prices.
Speculators are betting on increases in oil prices
Last week, investors bought December Brent crude call options to bet that the price would reach $100 a barrel or more.
“The market is waiting for now as investors want clarity on events in the Middle East,” said Jun Rong Yeap, market strategist at IG Asia Pte.
“Any hit to Iran’s oil infrastructure could result in Brent oil prices rising above USD 80 per barrel,” he adds.
Despite this, questions about the prospects for oil demand still hang over the markets – especially from importer no. 1 – China. (PAP Business)
