Rising Tensions Fuel Brent Crude Surge
In a dramatic turn of events, Brent crude has soared above the $90 per barrel mark for the first time since October. The surge comes as tensions in the Middle East reach a boiling point, threatening to escalate into a wider regional conflict.
Geopolitical Unrest Sparks Price Rally
Amid growing geopolitical risks, crude prices have been propelled higher. Reports of heightened threats to Israeli embassies have intensified concerns, with Iran vowing retaliation for a recent Israeli strike that claimed the lives of senior Iranian military figures.
Global Factors Drive Oil Prices
Besides the escalating tensions in the Middle East, global oil supplies have been tightening. Furthermore, robust U.S. fuel demand has provided additional support, lifting prices to new heights.
Market Reactions
Front-month Nymex crude for May delivery closed up by 1.3% at $86.59 per barrel, while front-month June Brent crude ended 1.4% higher at $90.65 per barrel. This marked the fifth consecutive daily gain and the highest settlement value since October 20 for both benchmarks.
Contrasting Trends in Natural Gas
In contrast, U.S. natural gas futures saw a decline as domestic inventories remained significantly above the five-year average. Front-month Nymex natural gas for May delivery finished 3.6% lower at $1.774 per MMBtu.
Future Outlook and Analysis
The recent oil price rally has raised the possibility of Brent crude reaching the $93-$95 range. However, Citi analysts caution that strong resistance at this level could prompt producers to hedge their sales and lead speculators to secure profits.
Despite the current bullish sentiment, Citi maintains a bearish outlook for 2025. The forecast predicts a slowdown in demand growth to under 1 million barrels per day, citing waning momentum in post-COVID jet fuel recovery and an increase in electric vehicle adoption.
According to Citi, the market is expected to transition from a bull market to a bearish one by mid-year, reflecting the evolving landscape of the energy sector.