Oil prices were largely steady on Tuesday, April 16, after the US announced plans to hit Iran with new sanctions after its weekend drone attack on Israel, and as Israel’s war cabinet is also set to meet for the third time in three days.
The current cool off in prices comes after concern that Iran would respond to the April 1 strike on its embassy compound in Damascus sent Brent to $92.18 last week -its highest since October. But prices retreated on Monday after Iran’s attack on Israel over the weekend proved to be less damaging than anticipated.
Brent crude futures for June delivery last rose five cents, or 0.1 per cent, to $90.15 per barrel while US crude for May gained 14 cents, or 0.2 per cent, to $85.55. Coming to domestic prices, crude oil futures rose 0.38 per cent higher at ₹7,142 per barrel on the multi commodity exchange (MCX).
What’s impacting crude oil prices?
-US Treasury Secretary Janet Ellen said she intends to hit Iran with new sanctions in coming days due to its unprecedented attack on Israel, and it could seek to reduce Iran’s capacity to export oil. “With respect to sanctions, I fully expect that we will take additional sanctions action against Iran in the coming days,” said Yellen.
-Israel’s war cabinet was set to meet for the third time in three days on Tuesday, an official said, to decide on a response to Iran’s attack, amid international pressure to avoid further escalating the conflict in the Middle East.
-Iran produces more than 3 million barrels per day (bpd) of crude oil as the third-largest producer within the Organization of the Petroleum Exporting Countries (OPEC) cartel. Iran will respond to any action against its interests, President Ebrahim Raisi was reported as saying by the Iranian Student News Agency a day after Israel warned it will respond to Tehran’s missile attack.
-Analysts said that the balancing act between sticky inflation, a hesitant Fed and the gradual move towards a full-blown regional conflict keeps oil … in its range. Material disruption to oil production, supply or shipping must take place to approach the $100 a barrel milestone. Currently such a development appears implausible, as per analysts.
Where are prices headed?
Crude oil consolidates in a range as investors look for fresh developments in the middle-east with focus on Israel-Iran tussle – any escalation there may led supply disruption from the region and push the global oil prices higher, according to analysts.
‘’Technically, trend remains positive till prices are above support at 6,950/ 6,890, upside prices may test target at 7,280-7,400 levels,” said Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.
Analysts also highlighted that the decline in prices was further compounded by the strength of the dollar index, which is currently trading at five-month highs, surpassing the 106 mark once again and thereby limiting the upward movement of global commodities.
‘’A statement from the Israeli army chief regarding potential retaliation against Iran provided some support for oil prices at lower levels. If tensions continue to escalate in the Middle East, it could certainly bolster crude oil prices. Support for crude oil is seen at $84.50–83.90, with resistance at $85.90-86.60. In terms of the INR, crude oil has support at ₹7,020-6,930 and resistance at ₹7,210-7,290,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
(Except for the headline, this story has not been edited by Universal Times Magazine staff and is published from a syndicated feed.)
