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Traders bet that death of Iranian President would not raise tensions in the Middle East.
Crude oil prices rise amid geopolitical uncertainty after Iranian President’s death
Crude oil prices saw an uptick on Monday due to political instability in major oil-producing countries. This follows the tragic death of Iranian President Ebrahim Raisi in a helicopter crash and the cancellation of a planned trip to Japan by Saudi Arabia’s Crown Prince Mohammed bin Salman due to health concerns regarding his father, King Salman. Brent and WTI crude prices climb Brent crude increased by 41 cents, or 0.5%, reaching $84.39 per barrel by 0632 GMT. Earlier, it hit $84.43, marking its highest point since May 10. Similarly, U.S. West Texas Intermediate (WTI) crude for June rose by 23 cents to $80.29 per barrel, after peaking at $80.35, the highest since May 1. The more-active July contract also climbed 31 cents, or 0.4%, to $79.89. Iranian leadership in crisis The unexpected death of Iranian President Ebrahim Raisi has introduced significant uncertainty into the oil markets. Raisi, a hardliner who was considered a likely successor to Supreme Leader Ayatollah Ali Khamenei, died in a helicopter crash near the Azerbaijan border. This incident raises questions about the future of Iran’s political landscape and its impact on global oil supplies. Saudi leadership’s health concerns Compounding the geopolitical tension, Saudi Arabia’s Crown Prince Mohammed bin Salman postponed his trip to Japan due to his father, King Salman’s, health issues. According to Japan’s Chief Cabinet Secretary Yoshimasa Hayashi, King Salman, who is 88 years old, is set to undergo treatment for lung inflammation. The state news agency confirmed these reports on Sunday, adding another layer of uncertainty to the oil markets. Market analyst perspectives Analysts, including Tony Sycamore from IG Markets, noted that these developments could further drive oil prices upward. Sycamore highlighted that the uncertainty surrounding King Salman’s health adds to the existing volatility in energy markets following Raisi’s death. He projected that WTI prices might rebound further toward $83.50, particularly after surpassing the 200-day moving average of $80.02. Data-driven market analysis The correlation between geopolitical events and oil prices is evident. Historical data shows that significant political disruptions in key oil-producing nations tend to trigger price fluctuations. For instance, during previous periods of instability in the Middle East, Brent and WTI crude prices experienced similar upward movements. This trend underscores the sensitivity of oil markets to geopolitical shifts. Impact on global oil supply Iran and Saudi Arabia are major players in the global oil market, collectively influencing global supply dynamics. Iran’s political instability and potential changes in leadership could disrupt its oil production and export strategies. Meanwhile, any health-related transitions in Saudi leadership might affect the country’s oil policies, particularly as it navigates the global energy transition and market stability. Investor and consumer implications Rising oil prices can have broad implications for both investors and consumers. For investors, the current situation presents potential opportunities in oil futures and related markets. However, it also entails risks associated with heightened volatility. For consumers, increased oil prices could translate to higher fuel costs, impacting transportation and goods prices, ultimately affecting global economic stability. The post Crude oil prices rise amid geopolitical uncertainty after Iranian President's death appeared first on Invezz
Oil prices climb amid uncertainty over Iran president's fate, Saudi King's health
* Search under way for Iran's president after helicopter crash* Saudi crown prince postpones Japan trip citing king's health* Saudi king to be treated for lung inflammation - SPA BEIJING, May 20 (Reuters) - Oil prices extended gains on Monday, inching up amid political uncertainty at major producing countries after Iran's president was feared dead in a helicopter crash and the Saudi crown prince cancelled a Japan trip, citing health issues with the king. Brent gained 32 cents, or 0.4%, to $84.30 a barrel by 0240 GMT, its highest since May 10. U.S. West Texas Intermediate crude (WTI) rose 5 cents to $80.11 a barrel, after hitting $80.23 earlier, the highest since May 1. A helicopter carrying Iranian President Ebrahim Raisi crashed on Sunday, Iranian officials said. Hopes are fading that Raisi and foreign minister Hossein Amirabdollahian survived the crash in mountainous terrain and icy weather, an Iranian official said on Monday after search teams located the wreckage. Separately, Saudi Arabian Crown Prince Mohammed bin Salman postponed his visit to Japan, scheduled to begin on Monday, because of a health issue with King Salman, said Japan's Chief Cabinet Secretary Yoshimasa Hayashi. Saudi Arabia's state news agency on Sunday reported that 88-year-old King Salman will undergo treatment for lung inflammation. "If the father's health is failing, it adds to the layer of uncertainty already circling energy markets this morning following the news that the Iranian President is missing," IG Markets analyst Tony Sycamore said. He added that WTI prices may rebound further toward $83.50 after rising above the 200-day moving average of $80.02. "I do think there are enough reasons out there for this to happen, more so when you factor in China property measures announced last week, including relaxing mortgage rules, lowering deposits, and buying unsold homes," Sycamore said. Brent had ended the previous week up about 1%, its first weekly gain in three weeks, while WTI rose 2% on improved economic indicators from the U.S. and China, the world's largest oil consumers. Despite the volatility in the region, oil prices moved only slightly. "The oil market remains largely rangebound and without any fresh catalyst we will likely have to wait for clarity around OPEC+ output policy in order to break out of this range," said Warren Patterson, head of commodities strategy at ING. The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, are scheduled to meet on June 1. "The market also appears increasingly numb to developments on the geopolitical front, likely due to the large amount of spare capacity OPEC is sitting on," Patterson said. Saul Kavonic, an energy analyst at MST Marquee, said the market and industry are already accustomed to Crown Prince Mohammed Bin Salman's leadership in the energy sector. "Continuity in Saudi strategy is expected regardless of this health issue," he added. In the United States, Washington took advantage of the recent drop in oil prices, saying late last week it had bought 3.3 million barrels of oil at $79.38 a barrel to help refill its Strategic Petroleum Reserve after a massive sale from the stockpile in 2022. Supporting the market last week, signs of easing inflation in the U.S. boosted expectations of interest rate cuts, which could decrease the value of the dollar and make oil cheaper for holders of other currencies. (Reporting by Colleen Howe in Beijing and Florence Tan in Singapore; Editing by Sonali Paul and Gerry Doyle)
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