Oil Prices Surge Amid Escalating US-Iran Tensions and Shipping Risks
Oil prices rose on Wednesday after US President Donald Trump rejected reports that he was prepared to ease sanctions on Iran. This move has caused Brent crude futures to rise $1.14, or 1.11%, to $103.73, while US West Texas Intermediate crude gained 15 cents, or 0.30%, to $89.50 a barrel.
The uncertainty surrounding the conflict between the US and Iran has made it difficult for major banks to gauge the direction of oil prices. JPMorgan analysts stated that they had lost visibility on the market and could no longer have a clear baseline scenario due to the escalation in tensions.
Daan Struyven, co-head of global commodities research at Goldman Sachs, expects oil prices to reach as high as $120 a barrel if attacks on vessels in the Middle East intensify. He noted that shipping risks had become a key driver of oil prices and that supply shocks in gas and fuels are larger than those in the crude market.