Brent oil prices edged up in early Friday trading. Following the sharp volatility of the previous session, during which the price of a barrel swung by as much as $16, the market appears more stable at the start of the final trading session of the week. Nevertheless, prices remain close to $110, nearly 50% higher than before the outbreak of the war in Iran, when a barrel of Brent was trading at around $73. With uncertainty surrounding the outcome and duration of the conflict, which is disrupting supply from the world’s main oil-producing region, volatility could quickly return if further developments emerge, particularly in the event of additional attacks on energy infrastructure. It is also notable that the spread between WTI crude, the benchmark for US-produced oil, and Brent, the global standard, has widened from around $4 per barrel to more than $13. This divergence is a source of concern, as some observers have raised the possibility of the US authorities restricting energy exports in order to shield domestic consumers from supply shortages and price volatility triggered by its actions in Iran. While it is doubtful that such a measure would have a positive long-term effect on the US energy sector or the wider economy, a further deterioration in the situation in the Persian Gulf could create the conditions for the Trump administration to adopt more drastic measures. Such a scenario would exacerbate the ongoing energy crisis and could push prices to levels not seen in more than a decade.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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