The price of oil: the middle East problem pushing a barrel to $74

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Since the beginning of the week, the tensions in the middle East asked the upward trend of the oil quotations, despite the fact that the situation between the US and China is heating up. Major market participants yesterday showed maximum activity in the futures market, buying contracts and thereby moving the quotes up. The price of Brent crude rose to $73,63 per barrel and shale oil WTI – to $63,50 per barrel.
Concerns about the global economic slowdown go by the wayside. The risk of a possible oil shortage encourages market participants to invest in futures contracts. Therefore, the price of black gold will continue to rise.
We must understand that the attack on the tankers in Saudi Arabia and a possible conflict in major oil-producing region in the world are those reasons due to which the price of oil will rise.
Yesterday, the coalition under the leadership of Saudi Arabia launched air strikes against bases of the Houthis in Sana’a, the Yemeni capital. It happened after the Houthis took responsibility for the drone strikes on the pipeline in Saudi Arabia earlier in the week. In fact Iran and Saudi Arabia are waging a war by proxy in Yemen. There the Saudis are the head of the Arab military coalition whose aim is the restoration of legitimacy in the country. But the Houthis, who hold Sana’a, supported by Iran.
Under the current tense conditions, oil prices in the short term could reach $74 per barrel. After fixing above this level, we can easily recover the lost local top at $76 per barrel.
Gaidar Hasanov
“International financial center”