Energy
Tuesday, January 30th, 2024 5:08 pm EDT
Key Points
- Oil Prices Stability: West Texas Intermediate (WTI) for March gained 39 cents, reaching $77.16 a barrel, while Brent for March rose 5 cents to trade at $82.45, indicating stable oil prices.
- IMF Global Growth Forecast: The International Monetary Fund (IMF) increased its global economic growth forecast to 3.1% for the year, citing unexpectedly strong growth in the U.S. and stimulus measures in China.
- Geopolitical Tensions: The oil market faced geopolitical tensions following a deadly drone attack on U.S. forces in the Middle East. Traders are monitoring how the U.S. responds to the attack, with President Biden attributing it to Iran-allied militants and expressing the intent to hold them accountable. Despite tensions, the oil market’s response has been relatively muted, and experts suggest a conflict between the U.S. and Iran could impact oil prices. National Security Council spokesperson John Kirby downplayed the likelihood of direct confrontation, emphasizing a reluctance for war with Iran. Retired Admiral James Stavridis anticipates a broader campaign against Iranian proxies, likely in Iraq, Syria, and Yemen. White House energy security advisor Amos Hochstein stated that disruptions in the Red Sea are manageable, involving re-routing cargos, and highlighted a balanced equilibrium between crude supply and global demand, with increased supply from the U.S., Brazil, and Guyana.
Oil prices remained steady on Tuesday, with West Texas Intermediate (WTI) gaining 39 cents to reach $77.16 per barrel, and Brent rising 5 cents to trade at $82.45. This stability followed the International Monetary Fund’s (IMF) increased global growth forecast for the year, attributing it to strong U.S. growth and stimulus in China. The IMF now predicts a 3.1% global economic growth, up by 0.2 percentage points from its October projection. However, earlier in the session, the oil benchmarks had experienced over a 1% decline as Hamas considered a proposal to pause fighting in Gaza, hinting at potential diplomatic efforts to de-escalate tensions. The decline on Monday was influenced by concerns about China’s real estate crisis affecting demand in the second-largest global economy.
The recent deadly drone attack on U.S. forces in the Middle East has also impacted oil markets. President Joe Biden held Iran-allied militants responsible for the attack and vowed to respond at a time and manner of the U.S.’s choosing. Defense Secretary Lloyd Austin assured that necessary actions would be taken to defend U.S. interests. However, National Security Council spokesperson John Kirby downplayed the possibility of direct confrontation with Iran, stating that the U.S. is not seeking war or further escalation. Retired U.S. Navy Admiral James Stavridis anticipates a broader campaign against Iranian proxies, potentially in Iraq, Syria, and Yemen, without escalating to a full-blown war.
While the oil market has responded relatively calmly to these geopolitical tensions, analysts suggest that a conflict between the U.S. and Iran could lead to higher oil prices. Stavridis acknowledges an increased risk of a broader conflict following the death of three U.S. service members but emphasizes that neither party desires a wider war. The Middle East’s growing conflict remains a visible risk for energy markets, according to Natasha Kaneva, head of global commodities research at JPMorgan. White House energy security advisor Amos Hochstein believes disruptions in the Red Sea due to attacks by Iran-allied Houthi militants are manageable, stating that rerouting cargos and tankers does not significantly affect oil prices. Despite the geopolitical tensions, Hochstein notes a well-balanced equilibrium between crude supply and global demand, with increased supplies from the U.S., Brazil, and Guyana.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/01/30/crude-oil-prices-today-wti-brent-down-on-gaza-truce-proposal.html
