Oil holds gain amid escalating geopolitical tensions

June 25, 2024 (MLN): Oil prices held their gains as investors weighed the potential fallout from rising geopolitical tensions from Yemen to Russia.

Brent crude traded near $86 per barrel after rising 1.1% yesterday.

While West Texas Intermediate crude (WTI) was at $81.67 per barrel.

Houthi militants have ramped up their attacks on ships off Yemen recently, while the BBC reported that Russia has blamed the US for a missile strike on occupied Crimea and warned of “consequences,” as Bloomberg reported.

Implied volatility for Brent has edged higher on the simmering geopolitical risk, including upcoming elections in Iran and in France, although it still remains near the lowest level in five years.

Oil is on track for a monthly gain, with prompt time spreads widening in a bullish backwardation structure, signaling tightening supply.

Traders will be watching measures of inflation and other economic data this week for clues on the path for monetary policy, which may impact crude prices.

Other parts of the market are showing strength. Money managers registered the biggest-ever weekly addition in net-bullish bets in ICE gasoil, Europe’s diesel benchmark.

The same gauge for Brent futures and options rose by the most since October.

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