Oil Prices Volatile Amidst Geopolitical Tensions and Market Uncertainty
Despite strengthening market fundamentals and tightening global oil supply, the oil price rally has failed to gain momentum, with Brent crude declining 7% and WTI down 4.8% over the past week. Concerns about the global economy and energy demand have weighed on sentiment. However, commodity analysts predict that oil markets will continue to tighten for the rest of the year, with a further reduction in global inventories expected. The underpricing of Middle East geopolitical risk and the potential shift in U.S. policy on Iran due to the Israel-Gaza war could impact Iranian oil exports. Despite surging U.S. production, global oil demand has exceeded pre-Covid levels.
