Oil on the rise, between geopolitical risk and hope of better demand

Oil on the rise, between geopolitical risk and hope of better demand
Oil on the rise, between geopolitical risk and hope of better demand

Oil prices climbed on Monday, driven by hopes of better demand in the United States which is banking on a drop in crude stocks during the summer and by geopolitical risks, particularly in the Middle East and with the war in Ukraine. The price of a barrel of Brent from the North Sea, for delivery in August, ended up 0.90% at $86.01.

Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery the same month, gained 1.11% to $81.63. “We had a good session on the oil market. Investment funds are starting to realize that the market could tighten significantly in the coming weeks.with the travel season in the United States, estimated Phil Flynn of Prices Futures Group.

“Increase in political risks”

Tamas Varga, analyst at PVM Energy also discusses “growing confidence” among investors “in the fact that global oil stocks will inevitably fall during the northern hemisphere summer”. In parallel, “there has been an increase in geopolitical risks”noted Phil Flynn. “Not only did the Houthi rebels attack ships over the weekend but there was also a Ukrainian strike in Crimea and the Russians are blaming the United States for this, which further tenses the situation”commented the Prices Futures Group analyst.

kyiv also claimed responsibility for a drone attack on several refineries in Russia on Friday. In the Middle East, even if there is no “no disruption to supply” black gold for now, “bellicose rhetoric largely contributes to supporting oil”Tamas Varga estimated.

Israel’s northern front, along with Lebanon, has been the scene of escalating fire between the Israeli army and Hezbollah, a Hamas ally, raising fears of a larger-scale war. On Sunday, the Shiite movement supported by Iran announced that it had targeted two Israeli military sites using explosive drones, seriously injuring a soldier, in response to the death of a leader of an allied Islamist group, in an Israeli strike in eastern Lebanon.

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