Uncertainties over the West Asia conflict continue to keep the market sentiment fragile and oil prices jumped 1% in early Asian trade. This is after the wild swings seen in the previous session when Brent Crude prices plunged nearly 5% to below $90/bbl and then rebounded to $92/bbl levels in twenty minutes.
Increased hostilities between US and Iran added to the gains for the global benchmark, Brent crude futures which was trading around the $92 per barrel mark, while US contract- West Texas Intermediate was quoted near the $89 per barrel level.
Oil gains on US military strikes
Oil prices extended gains as the US military launched strikes against Iran after an Apache helicopter was brought down by Tehran off the coast of Oman on Monday. US President Donald Trump deemed the operation as ‘necessary’.
However, Trump continues to hold his stance that Washington and Tehran are very close to reaching a final deal, and told the Wall Street Journal that the helicopter incident was not a big deal.
Why did Brent crude plunge nearly 5% in the previous session
Global oil prices continue to see sharp swings. It fell nearly 5% as Iran and Israel agreed to halt attacks over Trump’s insistence, raising market optimism over full resumption of supplies through the- Strait of Hormuz.
Brent crude futures tumbled to their 7-week low below the $90 per barrel mark, while WTI fell to its one-week around the $87 per barrel level. However, the fall was short-lived as the US carried out strikes against Tehran.
Supply disruptions continue to weigh on global oil markets, as shipping through the Hormuz passage, which transits nearly 20% of the global oil and liquified natural gas flows, remains under dual blockade.
Investors apprehensive about trade routes opening
Markets remain sceptical over the reopening of the trade route as the three-month stretched conflict seems to reach no end and worldwide inventories continue to decline . US crude oil inventories fell last for an eight consecutive week, Reuters reported citing market sources.
