WTI crude futures jumped more than 2% toward $74 per barrel on Friday, extending gains from the previous session as a deepening geopolitical crisis in the Middle East put a risk premium on oil prices.
On Thursday, Bloomberg reported that Iran has captured an oil tanker off the coast of Oman in response to a sanctions-related dispute last year when the US seized an Iranian tanker.
A US-led coalition also launched multiple attacks on Houthi targets in Yemen as the rebel group continued to disrupt trade in the Red Sea.
Meanwhile, a hotter-than-expected US consumer inflation report poured some cold water on bets that the Federal Reserve will start cutting interest rates as soon as March.
WTI futures are on track to end the week little changed, having dropped sharply earlier in the week after Saudi Arabia slashed its selling prices, before recovering those losses on rising Middle East tensions.
| Intraday Analysis | 1H Time Frame |
🔴 Oil jumped as the US and its allies launched airstrikes against Houthi rebels in Yemen, retaliating for attacks on ships in the Red Sea that have imperiled flows of fuel and goods through the vital waterway.
President Joe Biden said strikes had been conducted against a number of targets used by the Iran-backed group, with US officials saying radar sites and missile launchers were hit. A tanker industry group said military forces in the region were advising ships to avoid a key chokepoint near Yemen. The Houthis said all US and UK interests are now legitimate targets.
🔴 The main upside risk for prices concerns Iran and whether it’s drawn directly into the conflict, which could threaten oil supply in a region that produces a third of the world’s crude. The war-risk premium had previously been easing amid ample output from non-OPEC+ producers and slowing demand growth.
🔴 From our point of view, geopolitical tensions could support Oil Price in the short term, and from a technical point of view, our first Target is just below $80.