OIL gains 2% as Middle East tensions rise

OIL is up nearly 2% today, and we can link today buyers' activity to growing tension in the Middle East region. On the other hand, the overall demand picture for the oil market remains uncertain.

• The armed Huti militant group attacked another tanker in Oman. The vessel belonged to United Kingdom Maritime Trade Operations (UKMTO). 
• Yesterday, the Huti also launched their largest attack to date on a commercial shipping lane in the Red Sea. Also, attacks on Israeli ships in southern and central Gaza have intensified
• Bloomberg reported that the Iranian navy seized the Marshall Islands-flagged tanker St.Nikolas. A report by Iran's Tasnim TV suggested that the ship was a US vessel
• What's more, according to AP CEO Møller-Maersk (MAERSKA.DK) quoted by the FT, the disruption to Red Sea shipping could last for months

A Middle East stalemate?

• The United States and Britain have signaled that they will take further steps if the attacks continue. Meanwhile, the UN Security Council has passed a resolution demanding an immediate end to the attacks.
• So far, the U.S. is reluctant to engage in an offensive military operation in the region for fear of an uncontrollable escalation of tensions, in the Middle East, and the situation now appears to be a 'stalemate'.
• Barclays analysts have lowered their previous forecast by $8 and maintain that Brent crude will remain around $85 in 2024, despite the geopolitical premium. Barclays estimates that a slowdown in demand will play a key role in the price
• Slowing demand in China has led refiners to declare imports of less crude oil from Saudi Arabia (February 2024). As the world's largest exporter, Arabia recently announced the biggest cut in the price of exported oil in 13 months, adding doubts about demand.

WTI (D1 Interval)

WTI crude oil is currently trading near the $73 per barrel barrier and has been moving in a relatively narrow consolidation channel for quite some time. Its lower limit is located additional on the structure of 78.6% Fibo retracement of the upward wave initiated in May 2023. The upper limit of the mentioned channel may in the medium term run in the region of the 50-day exponential EMA (blue curve) and the 61.8% Fibo. 

Source: xStation