Iran's Oil Rises Again, Making Market Nervous
World oil prices remain in the green after a sharp two-day rally, as the market begins to seriously assess the risk of supply disruptions from Iran, OPEC's fourth-largest oil producer.
Brent prices held above US$63/barrel after surging nearly 6% in the past two days, while WTI hovered around US$59/barrel in Asian trading.
The main trigger: the escalating wave of protests in Iran, which has entered its third week. US President Donald Trump said the US is closely monitoring the situation and is considering "strong options," making geopolitical tensions even more sensitive in the market's eyes.
What makes traders even more wary is the potential disruption to Iran's exports of nearly 2 million barrels per day. If shipments/exports are disrupted, the "global supply surplus" narrative that previously depressed prices could be immediately offset by the risk premium.
This concern is evident in the derivatives market: interest in bullish (call) options has increased the most for US oil futures since July. This indicates that market participants are starting to take positions to anticipate increases and protect against volatility.
In terms of market structure, Brent volatility also increased, and the near-month contract spread widened into a backwardation pattern (the near-month contract price is more expensive than the front-month). This is usually interpreted as a sign that the market perceives short-term supply as tighter or riskier.
Outside of Iran, geopolitics is also intensifying: the spotlight has shifted away from Venezuela, Trump has re-emerged in the Greenland issue, triggering communication maneuvers, and Ukraine has reported an attack on a Lukoil drilling platform in the Caspian Sea, adding a new layer of risk to the energy market. (asd)
5 Key Points:
- Oil held firm after its biggest two-day rally since October.
- Brent above US$63, WTI around US$59 in the Asian session.
- Iranian protests raise the risk of export damage of ~2 million barrels/day.
- The options market is increasingly bullish: call demand has strengthened sharply since July.
- Widening geopolitical tensions (Greenland, Venezuela, Russian energy assets) are making the market more cautious. (asd)
Source: Newsmaker.id
