LONDON: Monday saw oil surpass $80 due to tensions in the Middle East, while New York stocks declined as worries about interest rates and politics undermined the previous surge.
The worldwide benchmark oil contract, Brent North Sea crude, crossed the $80 mark per barrel for the first time since late August.
Recent volatility has been seen in oil futures, with Brent falling below $70 last month due to worries about sluggish demand. However, last week, increased conflict in the Middle East caused prices to rise by 10%.
A full-scale regional conflict that would involve assaults on oil installations is being feared as Israel gets ready to retaliate against Iran for its missile attack last week.
Beyond the concerns in the Middle East, oil is also being boosted by expectations of increased Chinese demand following Beijing’s recent announcement of significant stimulus measures to revive its faltering economy.
Analysts say that the market expects the Opec+ group of oil-producing countries to reverse output curbs, which would offset price support. According to independent analyst Stephen Innes, “the oil market is on a wild ride, caught in a whirlwind of geopolitical tension, Opec+ strategy shifts, and a slowdown from its biggest customer, China.”
A recent advance on global stock markets was ended by worries about the Middle East and rising oil prices.
According to Joe Mazzola, a strategist at Charles Schwab, “Wall Street is on a four-week win streak but (is) under pressure from rising yields, a rally in crude oil, and a strong dollar amid geopolitical and inflation concerns.”
