| Commoditiy | Price | Weekly Change | 50day-Ave | 100day-Ave | 200day-Ave |
|---|---|---|---|---|---|
| Brent ($/b) | 97.67 | 2.69 | 102.71 | 91.50 | 77.83 |
| US WTI ($/b) | 94.92 | 2.76 | 98.12 | 86.06 | 73.19 |
| ICE Gasoil ($/MT) | 1,118.75 | 23.50 | 1,209.16 | 1,048.78 | 864.82 |
| Jet CIF NWE ($/MT) | 1,193.90 | 21.75 | 1,356.75 | 1,193.13 | 954.52 |
Oil markets have risen sharply this morning with Brent close to 98 \$/b after exchange of fire between Iran and Israel. Iran fired rockets at Israel after Israel attacked Beirut in Lebanon on Sunday. The Iranians said that was a red line so the response from Iran was not surprising. Trump called for Netanyahu to refrain from attacking Iran in retaliation, although Netanyahu seemed to have ignored and went ahead and carried out strikes on Iranian military sites and Iran responded with more rockets. This is the first time in two months that Israel has attacked Iran. Crucially, though the US did not get involved, so the market still hopes the talks can continue
This fresh exchange of attacks put the negotiations and potential deal into question. Trump was reported to have said at the weekend that Israel would have to accept a deal. In a tone somewhat similar to his dealing with President Zelensky, he said “I call the shots. I call all the shots,” following with Netanyahu “doesn’t call the shots.” This follows the call Trump had with Netanyahu last week on Israel’s expanding campaign in Lebanon and the impact that was already having on the talks, during which Trump was reported to have called Netanyahu “crazy”. In spite of the ceasefire agreed between Israel and Lebanon, fighting has continued and, crucially, Hezbollah rejected the ceasefire. There have also been skirmishes between Iran and the US last week, most notably, leading to damage to Kuwait’s international airport. Trump still maintains that a deal is still on the table, but reports over this weekend have highlighted the emergence of a fresh problem. A day after an adviser to Iran’s supreme leader told CNN that a peace deal hinged on the release of $24 billion in frozen Iranian assets, it is said the US is considering using those assets to pay for damage to other gulf states caused by the conflict.
The semi-annual OPEC meeting was held at the weekend; there was no mention of the disruption to the oil market in the press release after the meeting. The seven members that agreed to the additional voluntary cuts said they would unwind another 188k barrels of cuts as of July. This is symbolic for now as they are not able to produce at quotas but will be relevant when the Strait does reopen as it will provide more scope to ramp up production. They did agree to hold the next semi-annual meeting on 29th November.
In terms of where the market might go from here, we once again await progress on talks with Iran while we see if the new flare up of attacks continue. Provided there are no new signs of escalation, if Iran does not resume attacks other Gulf states and the US keeps out of the current exchange between Iran and Israel, it’s possible the market may settle down again and Brent retreats back to the mid 90 \$/b range or below.
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