Prices for oil reached their highest in two months due to hopes of stimulus by the Federal Reserve and escalating unrest in the Middle East.
Markets were recently shaken by the growing fears over Spain, whose yields for its 10-year government bonds reached dangerous levels of over 7 percent. Current oil prices rose to their peak rates since the month of May prior to profit-taking.
Brent North Sea’s crude price per barrel reached as much as $108.18 and New York’s light, sweet crude price per barrel for August delivery recently hit $92.94.
Carsten Fritsch, an analyst of Commerzbank, said that the current oil price increase is primarily caused by geopolitical risks.
Another issue is the deteriorating nation of Syria. Sixteen months of civil war has brought the country to an economic standstill. Moreover, there is growing focus on the possible conflict with Iran as Israel blamed the country for an attack in Bulgaria against Israeli visitors.
Oil price increases were seen for the majority of the week, primarily due to the Federal Reserve’s assurances of interventions in case the economy further weakens and also on growing tensions in Iran and Syria. In recent trading, the price of oil increased by over $2.50 per barrel with the fight in Damascus and China and Russia’s UN veto against renewed sanctions on Syria.
In the meantime, Israel accused Iran-sponsored Hezbollah of the suicide bombing in Bulgaria that took the lives of six Israeli citizens, leading to rumors of Israel’s retaliatory attack.
In the latter parts of last week’s ICE trading in London, Brent North Sea crude price per barrel moved higher from its August contract of $102.23, from the earlier week, to $105.98 for September delivery.
In the NYMEX, WTI crude price per barrel for August delivery rose from $86.82 to $90.91.
By: Chris Termeer