Molly Schwartz, a strategist at Rabobank, points out that despite increased tensions and the reopening of the Strait of Hormuz, the initial steep decline in crude oil prices due to the Iran ceasefire headlines has only been partially reversed. She points out that if hostilities resume, a short-term drop in the price of petroleum, roughly between $94 and $96 per barrel, could mitigate future price rises, indicating that markets might be considering a tactical US strategy.
Crude minimally responds to the closure of Hormuz
"Hawkish headlines about war were slightly more susceptible to global macro markets."
However, crude oil was the market that (surprise) scarcely moved yesterday. Following the initial announcement of a ceasefire, crude one-month futures dropped more over $16 to $94/bbl. However, the Strait reclosing and the truce's vulnerability revealed little price movement, with crude closure at about $96/bbl."
"Markets and inflationary expectations may be calmed by a well-received ceasefire declaration, which would also lower the price of oil, which it has done for the time being. We are coming off of a "suppressed" crude level of $94/bbl, as opposed to the $110/bbl level we were at earlier in the week, so if the Trump Administration decides to intensify offensive measures in two weeks (or even today), the price increase might be slightly tempered.
"The markets viewpoint is still something to think about, even if the moving components here are highly complicated and there is probably much more at play than just "because markets."
Crude minimally responds to the closure of Hormuz
"Hawkish headlines about war were slightly more susceptible to global macro markets."
However, crude oil was the market that (surprise) scarcely moved yesterday. Following the initial announcement of a ceasefire, crude one-month futures dropped more over $16 to $94/bbl. However, the Strait reclosing and the truce's vulnerability revealed little price movement, with crude closure at about $96/bbl."
"Markets and inflationary expectations may be calmed by a well-received ceasefire declaration, which would also lower the price of oil, which it has done for the time being. We are coming off of a "suppressed" crude level of $94/bbl, as opposed to the $110/bbl level we were at earlier in the week, so if the Trump Administration decides to intensify offensive measures in two weeks (or even today), the price increase might be slightly tempered.
"The markets viewpoint is still something to think about, even if the moving components here are highly complicated and there is probably much more at play than just "because markets."
