Crude oil futures rose on the first day of the second quarter of trading on Monday, following reports of a missile strike on the Iranian consulate in Damascus, Syria. The West Texas Intermediate contract for May delivery increased by 54 cents to settle at $83.71 a barrel, while the Brent contract for June delivery added 42 cents to settle at $87.42 a barrel. Syrian and Iranian state media reported that an Israeli missile strike hit the Iranian consulate in Damascus, resulting in casualties including a senior commander in Iran’s Revolutionary Guard.
The news of the missile strike in Syria has raised concerns about an escalation of conflict in the Middle East, causing near-term oil prices to rise. Geopolitical risks continue to impact the market, with reports of Ukraine striking Russian oil refineries and Houthi militant attacks in the Red Sea leading to the diversion of crude deliveries around the Cape of Good Hope in southern Africa. These events have contributed to the uncertainty in the global oil market.
In addition to geopolitical tensions, oil prices have been supported by expectations of strong global demand as OPEC+ continues to withhold barrels from the market at least through the second quarter. Both U.S. crude and Brent have seen three consecutive months of gains, with WTI up 17.8% for the year and Brent rising 14.2%. The ongoing strength in oil prices reflects a combination of supply concerns and robust demand forecasts.
Analysts are closely monitoring the situation in the Middle East and its potential impact on oil markets. Leo Mariani, an analyst with Roth MKM, highlighted the significance of the missile strike in Damascus and its implications for oil prices. The uncertainty surrounding geopolitical events, along with supply disruptions and strong global demand, continues to support oil prices in the short term.
Investors are reacting to the news of the missile strike by closely monitoring developments in the region and assessing the potential impact on oil markets. The situation in Syria underscores the fragility of the geopolitical landscape and the potential for conflicts to disrupt global oil supply chains. As tensions in the Middle East continue to escalate, market participants are bracing for further volatility in oil prices.
Overall, the rise in oil prices on the first day of the second quarter of trading reflects a combination of geopolitical tensions, supply disruptions, and strong global demand expectations. The missile strike on the Iranian consulate in Damascus has heightened concerns about an escalation of conflict in the Middle East, leading to increased volatility in oil markets. Moving forward, market participants will continue to closely monitor developments in the region and assess their potential impact on oil prices.
