Oil surges 6% 📈Will it repeat 2022 scenario?

Brent crude oil futures (OIL) on global markets rose by more than 6% today, approaching nearly USD 90 per barrel. Oil is now only about 12% away from the “psychological” USD 100 level.

This appears to be a good moment to compare the market’s reaction to rising oil prices with the price spike in February 2022, when Russia launched its “special military operation” in Ukraine. At that time, the scale of the increase was significantly larger. Prices rose from around USD 94 to USD 132 per barrel, representing roughly a 40% increase, which is notably higher than the move seen today.
Currently, oil prices are up around 20% since the beginning of the conflict and if the 2022 scenario would be in play now - the price can rise to $110 per barrel. However, the Middle East is far more important for the global oil market than Ukraine or even Russia. Looking at the chart, we can see that despite the “energy paralysis” at the time, speculative price increases were already halted in March, and prices ultimately failed to return to their previous highs.
At present, a potential disruption in the Strait of Hormuz, combined with strikes on oil infrastructure in the United Arab Emirates or Qatar that could last for weeks, appears to have significantly greater potential to fuel further speculative upside in oil prices. Much will depend on how long the conflict lasts and whether Iran retains the capability to carry out attacks on neighboring countries.

A key role could be played by China, which relies on oil imports from Iran and may become an economic casualty of the Middle East conflict. The question is whether Beijing will find a way to persuade Iran to refrain from targeting the region’s energy infrastructure and to ensure continued shipping through the Strait of Hormuz, the Red Sea, and Bab el-Mandeb.

OIL (D1)

Source: xStation5

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