Oil prices rose yesterday amid rising tensions in the Middle East, continuing the strength seen at the end of last week, ING's commodity experts Ewa Manthey and Warren Patterson note.
Trump to talk to President Putin about a proposed ceasefire
"ICE Brent settled almost 0.7% higher on the day, moving back above US$71/bbl. Along with US strikes on the Houthis in Yemen, several factors provided support to the market. China unveiled plans to revive consumption, while Chinese retail sales and fixed asset investment growth came in stronger than expected. Output data suggests that domestic apparent oil demand over January and February averaged 14.7m b/d, up 2.4% year on year."
"Middle East tensions escalated once again in recent days with US strikes on the Houthis, while the Houthis retaliated by targeting a US aircraft carrier. The Houthis are backed by Iran, which could lead to a broader escalation, particularly with President Trump saying Iran 'will be held responsible, and suffer the consequences' if the Houthis continue attacks in the Red Sea. Unsurprisingly, the Trump administration is taking a more hawkish stance against Iran, having tightened oil sanctions since taking office."
"Trump is scheduled to talk to President Putin today about a proposed ceasefire. Energy markets will be watching closely for any progress – particularly whether a potential peace deal might include the resumption of some Russian energy flows. This would be more impactful for natural gas rather than oil, given that the scope to increase natural gas flows is much bigger relative to oil."
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