Brent Surges 4% After Breaking Below $100 Amid Geopolitical Tensions

The price of Brent crude oil broke below $100 but quickly recovered after surging 4% on Thursday. The sudden reversal has left some analysts wondering if oil bears may have walked into a trap.

The sub-$100 break seemed to be driven by supply factors, with Gulf exports recovering and US crude stocks increasing. However, the rebound was largely due to geopolitical events, including China's halt of fuel exports and the US's expansion of its military presence in the Middle East.

According to analysts, the market is now pricing a 'product-tightness + shipping risk' premium, which can keep Brent supported even if crude inventories rise. This means that the focus has shifted from a crude glut to product tightness and shipping risks.

The US's decision to send more troops to the Middle East has added to the premium, with traders losing confidence in a quick resolution to the diplomatic deadlock. Refined-product shipments through the Gulf remain below pre-war levels, making physical flows vulnerable to security risks.