From $145 to $35 to $115 to nearly $25 and now to back above $70, the price action in the oil market has been a roller coaster for a full decade now, and the question on every trader’s mind is “how far will we rise before dumping again…and what does that mean for other markets?”
The Trump administration is cracking down on Venezuela and laying down threats of the toughest sanctions Iran has ever seen, adding to the risk premium for oil while there are signs that U.S. and global supplies are tightening.
Oil has taken off like a rocket as Israel strikes Iranian targets in Syria in response to rocket fire overnight. Israel says it targeted Iran’s military infrastructure in Syria, in response to an Iranian rocket attack on the occupied Golan Heights.
When oil markets are headed towards rebalancing, any shocks due to supply shortage may lead to a huge spike in prices. Brent prices fell on Tuesday to a low of $73.47 per barrel, indicating that $75 may be a short-term top.
Crude oil prices have been unable to build on the large gains made during Monday’s sessions. Those gains were driven by increased concerns over the potential restriction of Iranian oil exports after Israeli Prime Minister Benjamin Netanyahu accused Tehran of having a secret plan to build nuclear weapons.