Crude oil prices started the week up after U.S. Defense Secretary Lloyd Austin announced a guided missile submarine would be deployed to the Middle East. The move comes as Israel and its U.S. allies brace up for an attack by Iran and its regional allies in the Middle East in retaliation for the killing of Hamas leader Ismail Haniyeh in Tehran and that of a senior Hezbollah figure in Lebanon. “Secretary Austin reiterated the United States’ commitment to take every possible step to defend Israel and noted the strengthening of U.S. military force posture and capabilities throughout the Middle East in light of escalating regional tensions,” a statement by the Pentagon said, as quoted by Reuters.
The prices of oil futures rose on Monday with WTI up over 1% as investors remained laser-focused on tensions in the Middle East. While some reports claimed that a ceasefire between Israel and Hamas might be within reach, others revealed that Iran’s strike on the former could come before negotiators sit down to talk on August 15. It was also mentioned that the Iranian Revolutionary Guard and the new president’s administration remain at odds with regard to the scale of the attack. Many world leaders expressed their worries over the potential move as it could be a prelude to a regional conflict. West Texas Intermediate (WTI) for September deliveries gained 1.11% to sell at $77.70 per barrel at 4:06 am ET. At the same time, Brent for October settlements increased 0.83%, going for $80.36 a barrel. “The immediate market concern will be attacks on Iran’s oil supply and infrastructure,” Commonwealth Bank of Australia analyst Vivek Dhar told Bloomberg. Even so, Dhar added
“We see Brent oil futures trading between $75 and $85 a barrel in the short term,” noting that in case of a bigger war in the Middle East prices will jump.
Prices also received some support from statements made by U.S. Fed officials, who suggested last week that inflation may be declining sufficiently to motivate an interest rate cut sooner rather than later. Interest rates in the U.S. have been one of the main bearish factors for oil this year. “All the elements of inflation seem to be settling down (and) I’m relatively hopeful based on the conversations I’m having that that’s going to continue,” Richmond Federal Reserve Bank President Thomas Barkin said, as quoted by Reuters, on Friday.. NN BlackMask Pod Cast:
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