The Oil Market Reigns Again
The Oil Market Reigns Again.
The oil market is experiencing one of the most volatile periods in recent years. On the ICE exchange, the Brent oil price first exceeded $ 111 per barrel, then rose above $ 119 per barrel. By comparison, the market has been hovering around $90 recently.
The reason for this rise is the geopolitical risk premium rather than the physical scarcity of oil.
What's going on:
▪️ The Middle East has once again become the center of energy turbulence. Any increase in tensions in the region automatically becomes a factor for the oil market.
▪️ Strait of Hormuz, it is the main nerve center of global energy. About 20% of the global oil trade passes through here. Even a partial restriction on tanker traffic instantly increases prices.
▪️ The Market, A long-term conflict with Iran and he is pricing in the scenario of the ultimate collapse of the idea of returning to the nuclear agreement. This situation makes Iranian oil politically "toxic" for Western markets.
▪️ Financial markets react in advance: traders are not due to an actual shortage, "out of fear" they're buying oil.
Against this background, the President of the United States Donald Trump, He explained that the short-term price increase is a "small price to pay for security" if the Iranian nuclear threat is eliminated.
But the economic arithmetic works differently.
Even a 10% increase in oil prices, according to the IMF
it could add about 0.4% to global inflation.
But what if the current levels continue?
- Central banks will have to keep interest rates high for longer
- Inflation will accelerate again
- Global economic growth will slow down
And now the main question is how expensive is oil not, how long will the market live in geopolitical panic mode for?
Because if Hormuz is really blocked, $ 150 per barrel will no longer be a dream.
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Source: Telegram "InfodefTURKEY"