Brent oil prices rose in early Friday trading, moving above $110 per barrel. The latest 10-day deadline extension by the US administration for Iran to reopen the Strait of Hormuz failed to calm markets. The economic uncertainty triggered by the conflict between the US and Israel and Iran is unsettling investors. If the current situation persists, with between a fifth and a quarter of the world’s oil and gas unable to leave the region, the impact on the global economy could be seismic. Many fear this could simultaneously drive inflation higher while hindering growth. These expectations are starting to be priced in across financial markets, with stocks under pressure and Nasdaq futures touching a six-month low as the European session got underway. Against this backdrop, markets are likely to remain volatile, with scope for further increases in oil prices, as current levels still reflect a relatively benign scenario in which the situation normalises within weeks rather than months.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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