Source: Golden Ten Data
The geographical situation in the Middle East escalated over the weekend.$XAU/USD (XAUUSD.FX)$It opened sharply higher on Monday, then further expanded to 20 US dollars, breaking through 1,855 US dollars/ounce, and is now reported at 1,849 US dollars/ounce; COMEX's most active gold futures contract instantly traded 2,093 lots within 1 minute at 06:00 Beijing time on October 9, Beijing time, with a total trading contract value of 387 million US dollars.
The latest market figures show,International oil prices continued to rise, with WTI crude oil and Brent crude oil futures both rising by more than 5%. Due to heightened risk aversion,US stocksThe three major stock index futures opened and fell on Monday. Among them, NASDAQ futures and S&P 500 futures all fell by about 0.7%.
$USD (USDindex.FX)$Go higher. The instability in the Middle East is likely to add another layer to the dollar's already excellent performance in recent months.
With the sudden outbreak of war in Israel, one of the key issues traders are most concerned about is:Will this conflict spread to other parts of the region?
Crude oil traders do not expect prices to continue to rise sharply due to the conflict, as there is no immediate threat from the supply side. butEveryone is watching IranIt is an important oil producer and a major supporter of Hamas, which launched this weekend's attack on Israel.
A retaliatory attack on Iran will raise concerns about the Strait of HormuzThis is an important navigation network. Tehran had previously threatened to close the strait. Furthermore,The momentum of the US crackdown on Iran's oil exports again is also a likely prospect.
“Iran is still a huge variable,” said Helima Croft, chief commodity strategist at RBC Capital Markets and former CIA analyst. “Israel will escalate its long-standing secret war against Iran.” “What is unpredictable is how Iran will respond to this intensification.”
After months of sharp production cuts in Saudi Arabia and Russia, global crude oil supplies have declined, increasing the risk of a wider conflict. Last month, their supply restrictions once pushed Brent crude oil futures close to $100 per barrel.
“It's unlikely to have an impact on oil supply in the short term, but it could eventually have an impact on supply and prices.” Pierre Andurand (Pierre Andurand), a famous oil hedge fund trader, said.
The attack almost coincided with the 50th anniversary of the Arab oil embargo, which also involved Israel as a result of the war, where Saudi Arabia and other OPEC oil producers cut off oil supplies to the West.
Currently, no one predicts that Saudi Arabia will shut down oil supplies in order to unite with the Palestinians while negotiating with Washington to normalize relations with Israel.In the worst case, this conflict could disrupt the normalization talks and prevent any additional Saudi oil flows that may arise.
Over the weekend, ministers of the UAE, Kuwait and Saudi Arabia confirmed their support for OPEC+ policies.The energy minister of the UAE, one of OPEC's key member states, made it clear on Sunday that the conflict would not affect the organization's decisions. “We don't participate in politics; we manage according to supply and demand, and don't consider what each country does.” UAE Energy Minister Suhail Al Mazroue (Suhail Al Mazroue) told reporters in Riyadh.
Iran, as an OPEC member, has expressed support for the Palestinian attacks.If Israel makes a retaliatory blow to any Iranian infrastructure, “crude oil prices will immediately soar due to people's perception of the risk of interruption”Bob McNally, president of Rapidan Energy Group and former White House official, said. At the moment, this seems unlikely to happen, he said.
As Iran's oil exports have rebounded to their highest level in five years, the importance of Iranian oil to the market is increasing. With Washington's tacit acquiescence, the two countries engaged in exploratory diplomacy to restrain Tehran's nuclear program. “I think Israel's latest developments will mean stricter enforcement of sanctions against Iran, so Iran's oil supply will decrease in the future,” Anduran said. “And next, who knows what impact this chain reaction will have in the region?”
In a more extreme case, Iran could respond to any direct provocation by blocking the Strait of HormuzThis is a waterway bottleneck in the northern Arabian Sea. Tankers transport nearly 17 million barrels of crude oil and condensate through this waterway every day, which is only 21 miles wide at its narrowest point. Tehran threatened to close the strait in the face of sanctions in 2011, but eventually abandoned this idea.
This year's increase in Iran's crude oil supply will help stabilize fuel prices this year. The joint operation of Saudi Arabia and Russia is draining oil stocks at the fastest rate in years, bringing significant price premiums to immediate supply. “The crude oil market is very tight,” said Gary Ross, a senior petroleum advisor and hedge fund manager at Black Gold Investors Ltd. (Black Gold Investors). “The physical market continues to shout, and spot premiums are rising, driving up the average price.”
However, signs emerged last week that the crude oil bulls' efforts to push oil prices to $100 have gone too far, as Brent crude oil fell 11% on the ICE European Futures Exchange to below $85. Production cuts in Saudi Arabia and Russia may have raised oil prices too high, heightened concerns about the economy, and increased the risk of interest rates rising.
On the other hand,Cutting production to around 9 million barrels per day provides Saudi Arabia with a huge reserve of backup capacity that can be mobilized if supply is interrupted due to the current crisis.According to foreign media estimates, Saudi Arabia has a backup production capacity of about 3 million barrels/day, while neighboring UAE still has 1 million barrels.
The huge backup capacity buffer is another reason why traders don't expect an immediate price spike when the market reopens. However, these events may restore some of the geopolitical risk premiums that have disappeared in recent years.
“The Hamas attack and Israel's response have raised the geopolitical temperature,” said Richard Bronze, head of geopolitics at energy consulting firm Energy Hospitals Ltd.
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