OIL PRICES SOAR AMID SUPPLY DISRUPTIONS FOLLOWING DRONE ATTACK
The global oil market has kicked off the week with a significant uptick in prices, driven by supply disruptions resulting from a drone attack on U.S. forces stationed in Jordan. Similarly, Gold Price Rises Amidst Geopolitical Tensions: What’s Driving the Precious Metal’s Value?
This event of attack has sent strong shockwaves through the energy sector and the commodity sector, with Brent crude and West Texas Intermediate (WTI) both experiencing notable price increases.
In a significant escalation of tensions in the Middle East, a drone attack near the Syrian border in northeastern Jordan resulted in the tragic loss of three US service members’ lives, with at least 34 others sustaining injuries.
The attack, which is suspected to have been orchestrated by Iran-backed groups operating in Syria and Iraq, has prompted a swift response from President Joe Biden, who has vowed to ensure that those responsible are held accountable for their actions.
MONDAY’S GOLD REPORT AND TECHNICAL ANALYSIS
BRENT CRUDE SURGES TO $84.04 PER BARREL
CFDs on Brent Crude oil posted an intraday high of $84.04 and intraday low of $83.00. Oil is currently trading at $83.18 (12:40pm Monday, 29 January 2024 (GMT+5) Time in Pakistan).
WTI CRUDE RISES TO $79.25 PER BARREL
CFDs on WTI Crude Oil posted an intraday high of $79.25 and intraday low of $78.08. Oil is currently trading at $78.29 (12:40pm Monday, 29 January 2024 (GMT+5) Time in Pakistan).
SIGNIFICANT WEEKLY GAINS
Last week, both Brent crude and WTI experienced substantial gains of 6.22% and 6.46%, respectively. These increases represent the most significant weekly surge in oil prices since August 2023. The sharp rise in prices underscores the impact of geopolitical events on the energy market.
GEOPOLITICAL UNCERTAINTY IN THE MIDDLE EAST
The drone attack on U.S. troops in Jordan has raised concerns about a broader conflict erupting in the oil-rich Middle East.
Analysts have noted that this incident could mark a critical turning point in the ongoing regional conflict.
RBC Capital analyst Helima Croft commented that a more substantial U.S. involvement in the war could lead to potential disruptions in regional energy supplies.
OIL TANKER ATTACKS AND SECURITY RISKS
The recent attack on an oil tanker operating on behalf of Trafigura off the coast of Yemen has heightened concerns about supply disruptions. Trafigura is currently assessing the security risks associated with further Red Sea voyages, as the market reevaluates the risk of oil tanker attacks.
IMPACT ON RUSSIAN NAPHTHA EXPORTS
Russia is also grappling with supply disruptions. Fires at refineries on the Baltic and Black Seas have disrupted operations, leading to a potential cut in exports of naphtha, a crucial petrochemical feedstock. Traders and ship-tracking data from LSEG indicate that around a third of Russia’s total exports may be affected.
UPCOMING OPEC+ MEETING
On February 1st, leading ministers from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, collectively known as OPEC+, will convene online. While discussions regarding oil production levels for April and beyond are on the horizon, sources suggest that the meeting may be too early for decisive output policy decisions.
In conclusion, the drone attack and its ripple effects in the Middle East have injected volatility into the oil market.
As global leaders and energy stakeholders monitor the situation closely, the energy market remains in a state of flux, with potential implications for oil prices and supply dynamics in the coming weeks.
