Oil markets flourished on Monday with a 3% price jump, rising for a fifth consecutive session on expectations of a widening Middle East conflict that could tighten global crude oil supplies. Tensions in the Middle East have amplified since the Israeli military said it would on “peak alert” on 12th August. Geopolitical complexities in the region are expected to have a pronounced impact on key commodities such as crude oil.
Marc Pussard, Head of Risk at APM Capital, elaborated on commodity fluctuations in the Middle East, citing “global benchmark Brent crude futures settled higher at $82.30 a barrel, gaining $2.64, or 3.3%. US West Texas Intermediate crude futures settled at $80.06 a barrel, up $3.22, or 4.2%.” The Middle East braces for political unrest as the US Defense Department confirms sending a guided missile submarine to the region to establish the support of allies in the Iran-Israel conflict. Iran and Hezbollah have vowed to retaliate for the assassinations of Hamas leader Ismail Haniyeh and Hezbollah military commander Fuad Shukr. Any attacks in the region will have a direct impact global crude oil supply and consequent price hikes.
John Kilduff, partner at Again Capital in New York, expressed growing agitations surrounding the Iran-Israel, stating “a broadening war could lead Israel to target Iranian oil and hamper crude output from other significant producers in the area, including Iraq,”
Tensions in the Middle East coupled with the looming anticipation of Fed rate cuts in September are expected to significantly raise crude oil demand as spending is spurred in the US economy.
