Oil Market Fluctuations
Both oil benchmarks gained in early trading, initially jumping over 3% on news of explosions in Iran as the conflict continues to influence investor sentiment and drive market fluctuations. Global benchmark Brent traded 1.73% higher at $88.62 a barrel after topping $90 earlier, while US West Texas Intermediate (WTI) rose 1.75% to $84.1 per barrel.
Russ Mould, AJ Bell investment director, mentioned, “Oil prices were briefly above $90 per barrel before easing while gold moved within touching distance of all-time highs.”
Market Reactions and Central Bank Monitoring
The price of gold also rose to $2,411.09 per ounce in early trade on Friday, as investors turned to the deemed safe haven asset. Financial markets had a rough week amid escalating tensions in the Middle East after reports of explosions and a possible Israeli airstrike in Iran. Central banks will be closely monitoring any further commodity market fluctuations as higher oil prices can sway inflation and thus the European Central Bank’s monetary policy path.
On Monday, Lithuanian ECB member, Gegiminas Simkus, stated that geopolitical shocks such as an escalation in the Israel and Iran conflict could cancel the ECB June rate cut. Meanwhile, according to Goldman Sachs, Iran’s crude oil production has increased to approximately 3.4 million barrels per day, accounting for 3.3% of the global supply and marking an increase of about 0.6 million barrels per day over the last two years, with the majority of exports directed to China.
Source: Adapted from various news sources.
