Oil Prices Supported by Middle East Hostilities

  • USOil
    (${instrument.percentChange}%)

USOIL Analysis

"Iranian-backed Houthi terrorists" attacked oil tanker M/V Marlin Luanda on the Gulf of Aden on Friday, according to US Central Command [1]. The ship is operated on behalf of commodities trading giant Trafigura, which continues to "assess carefully the risks involved in any voyage" [2]. This was just the latest hit against commercial vessels in the region by the Yemen-based Houthis, designated as a "Specially Designated Global Terrorist group" by the United States [3]. The Gulf of Aden leads to the Red Sea, which is the entry point to the Canal Suez, a critical path for global trade.

At the same time, tensions between Washington and Tehran escalated after an attack in a US base in northeast Jordan on Sunday. The hit led to the death of three US service members and left at least thirty-four injured [4]. US President Biden accused Iran for the attack, saying that it was carried out by "radical Iran-backed militant groups" and vowed to "hold all those responsible to account at a time and in a manner our choosing" [5]

These developments can disrupt oil supply and support prices, as OPEC+ has implemented additional curbs in the first quarter of the year. As a result, USOil heads towards the conclusion of its first profitable month since September. It tests the critical 38.2% Fibonacci of the last leg down, which brings 84.90 in the spotlight.

On the other hand, the International Energy Agency sees a "a reasonably well supplied" market this year and raised its forecast to growth of 1.5 million barrels per day (mbpd), while seeing demand expansion to ease from 2.3 mbpd in 2023 to 1.2 mbpd in 2024 [6]. Furthermore, the advance of USOil appears stretched and a rejection of the crucial 38.2% Fibonacci could lead to a breach of the EMA200 (at around 74.00), although steeper fall that would threaten 67.69 does not look easy under current conditions.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 29 Jan 2024 https://www.centcom.mil/MEDIA/PRESS-RELEASES/Press-Release-View/Article/3658448/update-fire-extinguished-on-mv-marlin-luanda-following-houthi-anti-ship-ballist

2

Retrieved 29 Jan 2024 https://www.trafigura.com/news-and-insights/responses/statement-re-marlin-luanda/

3

Retrieved 29 Jan 2024 https://www.state.gov/terrorist-designation-of-the-houthis/

4

Retrieved 29 Jan 2024 https://www.centcom.mil/MEDIA/PRESS-RELEASES/Press-Release-View/Article/3658552/update-us-casualties-in-northeast-jordan-near-syrian-border/

5

Retrieved 29 Jan 2024 https://www.whitehouse.gov/briefing-room/statements-releases/2024/01/28/statement-from-president-joe-biden-on-attack-on-u-s-service-members-in-northeastern-jordan-near-the-syria-border/

6

Retrieved 15 Jun 2024 https://www.iea.org/reports/oil-market-report-january-2024

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.