Oil prices climb above US$80 per barrel
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The news: Brent crude prices surged above USD80, rising over 3% to a five-week high as escalating conflict in the Middle East fuelled fears of supply disruption.
The context: Hamas fired rockets at Israel on the first anniversary of the 7 October attacks that triggered Israel’s war against the Iranian-backed militant group, prompting Israeli strikes on Gaza and Lebanon.
Concerns are growing about potential attacks on energy infrastructure, especially in the Strait of Hormuz.
Hedge funds, which had previously bet on oil prices falling due to oversupply, have started reversing their positions, trimming short bets and increasing long positions, The Financial Times reported.
Some computer-driven funds were still betting against oil as of last Thursday, the paper said.
The numbers: Brent, the global oil benchmark, had dropped sharply since April, but gained over 8% last week, the largest weekly rise since January 2023.
Analysts from Goldman Sachs estimate that prolonged disruptions in Iran’s oil exports could push Brent crude prices to USD85, or into the mid-USD90s without Opec intervention.
What they said: “Investors are focused on the risk that Israel and Iran may enter a cycle of retaliatory attacks that may escalate into a broader conflict,” Goldman Sachs analyst Daan Struyven told clients in a note.
The source: The Financial Times
