Oil Prices Retreat as Iran Tensions Ease
Oil prices retreated from their highest levels on Wednesday as geopolitical tensions that have threatened a disruption in crude stockpiles eased for now.
Global benchmark Brent futures gained 0.6% to $68.71 a barrel after posting its highest level since mid-September 2019 of $71.75 earlier in the session.
West Texas Intermediate (WTI) futures rose 0.4% to $62.95 a barrel. Climbing as much as $65.85 to record its highest since late April 2019.
Elsewhere, gold futures for February contract surged 1.1% to $1,592.05 per troy ounce. Before retreating to trade 0.6% higher to $1,584.95 per ounce.
Some analysts said the yellow metal stood on a near-term high of $1,600.
Gold has grown optimistic since the start of 2020. Safe-haven buying in precious metals strengthened due to heightened conflict in the Middle East.
Oil Prices’ Rally Likely to be Short-lived
Oil prices rose to new highs at the start of the trading day in the wake of Iran’s airstrike at US coalition forces stationed at bases in Iraq.
The Pentagon confirmed on Tuesday that Iran launched more than a dozen ballistic missiles at two US facilities in Iraq.
Iran’s foreign minister Jawad Zarif later said the country concluded proportionate measures. It was not seeking a further escalation of the war. While US President Donald Trump announced, all is well, signaling a momentary calm.
Trump’s remarks indicated an unexpected change from the aggressive tone the President has used in recent days to describe tensions with Iran. Which intensified following the killing of Iranian General Qassem Soleimani on January 3.
Tension in the energy commodities market could recede. As long as oil production complexes remain unaffected by the attacks, according to analysts.
Furthermore, executive and analysts said oil markets are keeping an eye on the targets in Wednesday’s attack being military, rather than crude facilities.
Chairman of Japanese oil group Inpex Corp Toshiaki Kitamura believed the surge in oil markets would be a temporary phenomenon.
US shale oil players will boost output if oil prices remain stronger, Kitamura stated. Although there was no reason to push down prices either.
Kitamura expects the crude to trade between $60-$70 a barrel this year.
Without an actual supply disruption, US investment bank Goldman Sachs Group, Inc. sees the recent rally in energy commodities to be unsustainable as well.
United Arab Emirates energy minister Suhail al-Mazrouei said on Wednesday he sees no significant risk of supplies through the Strait of Hormuz being blocked.
