Oil prices continued to climb as tensions escalated in the Middle East, surpassing $90 a barrel and reaching new heights. The conflict between Israel and Hamas, along with the strike on an Iranian diplomatic compound in Syria, has raised concerns about a broader regional war. This, combined with OPEC+’s supply cuts and strong demand, has led to an 18% increase in crude prices this year.
The ongoing deadlock in cease-fire talks between Israel and Hamas, as well as doubts about Qatar’s role as a mediator, have added to the uncertainty in the region. Meanwhile, OPEC+ has decided to maintain supply cuts for the first half of the year, further tightening global markets and supporting the case for higher oil prices. Market analysts, including JPMorgan Chase & Co. and ANZ Banking Group Ltd., have become more bullish, predicting potential rallies to $100 and raised three-month outlooks to $95 respectively.
In addition to geopolitical factors, oil gauges are indicating further price increases, with strengthening timespreads and call options trading at a premium over put options. Money managers have also been increasing their net-long positions, signaling confidence in the upward momentum of oil prices. The combination of escalating tensions in the Middle East, ongoing supply restrictions, and bullish market sentiment is driving oil prices higher and raising the possibility of further gains in the near future.
