BRICS Summit Aims to Stem Energy Crisis with Maximum Restraint
The BRICS summit concluded with a call for maximum restraint amidst the ongoing energy crisis, which has reached critical economic tipping points. This diplomatic approach could potentially support the latest pullback in crude oil prices.
The energy crisis has led to steep price surges across WTI, Brent, and the Energy Select Sector SPDR Fund (XLE), with WTI breaking above a 7-month declining resistance near $94, and Brent rallying toward its 7-month declining resistance near $108. The global food-price index has also reached levels last seen in 2022.
Indian Prime Minister Narendra Modi stated at the summit: 'We have to transform this pyramid of privilege into a platform of partnership.' This shift towards resolution and cooperation could help limit pressure on global economic growth and reduce the risk of disruptions to oil exports, shipping routes, and energy flows through the Strait of Hormuz.
The current oil-market structure continues to interact with inflation data, Treasury yields, and expectations for the Federal Reserve's policy decision. The broader risk-off narrative could begin to reverse if crude oil breaks below its key support levels, Treasury yields extend their pullback, and geopolitical tensions ease ahead of the U.S. midterm elections.