Oil Prices Surge as Middle East Tensions Escalate

Oil prices are rising for a second consecutive week due to ongoing tensions in the Middle East and disruptions to oil flows. Brent crude futures have climbed more than 6.1% since last week, while US West Texas Intermediate futures have risen 5.3%. The gains come after the US threatened to impose tough sanctions on Iran and Tehran responded with threats of its own.

Soni Kumari, an analyst at ANZ, attributed the price increase to the US's hardline stance against Iran, which includes re-imposing a blockade and threatening tougher sanctions on Iranian oil exports. Crispus Nyaga, research analyst at Empire FX, noted that while the immediate supply impact may be limited, increased shipping incidents and retaliation could exacerbate the situation.

Hedge funds have taken a bullish stance on refined products, with net long positioning in European diesel contracts reaching its highest level in six months. In the US, total long positions on diesel contracts surged to their highest since February, while net bullish bets on US gasoline contracts reached their highest since March 17.