Oil prices rose sharply in early Asian trade on Tuesday, recovering from the previous session’s losses as escalating Middle East tensions fueled supply fears. This comes despite concerns about a potential U.S. recession that could dampen demand in the world’s largest oil consumer.
Crude oil’s loss was reduced to around 3% following an end-of-month boost from the mentioned geopolitical developments. Overall, both WTI and Brent crude remain stuck, having traded sideways for the past two years within some well-established and still wide ranges, which in the case of Brent is currently between USD 75 and USD 95 and within that range a narrowing one, currently between USD 78 and USD 87. “It has been argued throughout the latest stage of the recent correction that the move had more to do with long liquidation from hedge funds and technical selling from others than an actual deterioration in the fundamental outlook, and we tend to agree with this observation, potentially setting the stage for another rebound in the coming weeks”, said a commodities report from Saxo Bank.
Several U.S. personnel were injured in an attack on a military base in Iraq on Monday, according to three U.S. officials who spoke to Reuters. This incident has heightened regional tensions following last week’s targeted killings of senior members of militant groups Hamas and Hezbollah.
Market Turmoil: UAE & Saudi Stock Exchanges Plunge Amid Global Sell-Off
U.S. West Texas Intermediate (WTI) crude futures climbed $1.18, or 1.6%, to $74.12 per barrel by 1022 GMT in early Asian trading.
On Monday, both WTI and Brent crude benchmarks fell by 0.7-0.8% amid a broader selloff in global stock markets. However, oil’s decline was cushioned by concerns that Iran might retaliate for the assassination of a Hamas leader in Tehran, potentially leading to a wider conflict in the Middle East.
Adding to the geopolitical complexity, a senior ally of Russian President Vladimir Putin arrived in Tehran on Monday for discussions with Iranian leaders, including the president and top security officials, as the Islamic Republic considers its response to the recent events.
