HomeBusinessOil range limits as traders monitor Iranian and Saudi developments

Oil range limits as traders monitor Iranian and Saudi developments

(Bloomberg) — Oil traded within a narrow range Monday as the market watched for any fallout from political unrest at two of the world’s biggest crude producers.

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Brent was hovering around $84 a barrel after posting its first weekly advance this month, while West Texas Intermediate was trading around $80.

Iranian President Ebrahim Raisi and Foreign Minister Hossein Amirabdollahian were killed in a helicopter crash. In addition, there are concerns about the health of 88-year-old King Salman Bin Abdulaziz of Saudi Arabia, father of the country’s factor ruler, Crown Prince Mohammed Bin Salman.

Saudi Arabia is OPEC’s largest producer and Iran the third largest, but there are no immediate signs that recent developments will limit oil supply. Iran’s Supreme Leader Ayatollah Ali Khamenei has said there “will not be any disruption to the country’s affairs” as a result of the incident.

Analysts downplayed the significance of the events for crude futures markets. UBS Group AG commodities analyst Giovanni Staunovo said “oil policy is unlikely to be affected,” a sentiment echoed by consultancy Wood Mackenzie Ltd.’s vice president of refining, chemicals and oil markets, Alan Gelder.

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Global benchmark Brent is up about 10% so far this year, supported by OPEC+ supply cuts, although prices have cooled since mid-April. Market watchers are turning their attention to the upcoming producer group meeting on June 1, where a rollover of existing restrictions is expected.

Elsewhere, drone attacks on Russian refineries continue, with the Slavyansk refinery hit this weekend. An oil tanker bound for China was hit by a Houthi missile in the Red Sea region on Saturday. And money managers have sharply reduced their net long positions on Brent to the lowest level since January, although they were increased on WTI.

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