Oil prices rise in early Asian trading on Tuesday, reversing losses from the previous session. Investors continued to weigh the risks posed by geopolitical tensions in the Middle East, particularly between Israel and Iran. Global benchmark Brent crude oil futures rose 39 cents, or 0.5%, to $87.39 a barrel by 0033 GMT, while U.S. West Texas Intermediate crude futures were up 40 cents, or 0.5%, to $82.30 a barrel.
Previous Session’s Movements
Both benchmarks had fallen 29 cents in the previous session. This decline came despite the escalation of tensions between Israel and Iran, as the market perceived that these developments had little immediate impact on oil supplies from the region.
Oil Prices Rise in Asian Trading
Analysts pointed out that numerous risks persist in the oil market. ANZ analysts highlighted the U.S. approval of new sanctions on Iran’s oil sector. These sanctions broaden current measures to include foreign ports, vessels, and refineries that knowingly process or ship Iranian crude.
Geopolitical Backdrop and Volatility
“The geopolitical backdrop is still very fraught with so many risks at the moment, so we’re going to see a lot of volatility until there’s a lot more clarity around it,” ANZ analysts stated in a podcast. This uncertainty is likely to keep the market on edge and lead to price fluctuations.
Barclays’ Analysis and Forecast
Barclays analysts indicated that risks to their forecast of $90 a barrel for this year’s Brent prices remain tilted to the upside. They noted that while the immediate threat of geopolitical risk impacting oil market fundamentals has diminished, the overall trend in such risk since October last year remains concerning.
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Inventory Expectations
According to a preliminary Reuters poll of analysts, U.S. crude oil inventories are expected to have increased last week. In contrast, refined product stockpiles likely fell. These contrasting movements in inventory levels could also impact oil prices in the coming days.
Oil prices have risen in early Asian trading, driven by ongoing geopolitical tensions in the Middle East. The market remains sensitive to developments in this region, with analysts highlighting the potential for further volatility. The outlook for oil prices will likely continue to be influenced by geopolitical factors and inventory data in the near term.
