Oil prices approach five-month high amid Middle East tensions
What's the story
Oil prices are inching toward a five-month peak as investors monitor escalating tensions in the Middle East and ongoing supply issues.
Despite experiencing a 0.9% decline on Monday, marking its first drop in five consecutive trading sessions, Brent futures, a crucial benchmark for global oil prices, traded above the $90 per barrel threshold.
Meanwhile, West Texas Intermediate, another important benchmark, traded below $87.
Geopolitical impact
Middle East tensions influence global oil market
Israeli authorities have reported progress in talks for a truce in Gaza, hinting at a potential decrease in conflict. However, this claim has been contested by Hamas.
The oil market is also preparing for Iran's reaction to an alleged Israeli attack on its consulate in Syria last week, with Hezbollah indicating its readiness for war.
Market sentiment
Market optimism persists despite geopolitical uncertainties
Despite geopolitical uncertainties, the overall market sentiment remains positive.
Some experts predict that oil prices could reach the $100 mark again if OPEC+ continues with its production cuts.
The options market is showing resilience, with the highest purchase of bullish call options for Brent — contracts that profit when oil prices increase — since 2019 recorded last Friday.
Market forecast
Traders await key reports on supply and demand
In the coming week, traders will be closely watching a series of reports that will provide insights into the supply and demand forecast.
These include monthly releases from OPEC and the International Energy Agency.
These reports could significantly influence market trends and future oil price movements.