Oil rises on geopolitical tensions
- Tensions in Persian gulf push up oil prices.
- IEA to revise demand growth forecasts lower.
Oil is solidly bid on both sides of the Atlantic this Monday morning amid heightened tensions, courtesy of Iran’s seizure of a British tanker.
As of writing, Brent oil is trading at $63.17 per barrel, representing a 0.5% or 32 cent gain. Meanwhile, a barrel of WTI is changing hands at $56.00 – up 35 cents or 0.63%.
Iranian military said they had captured a British oil tanker in the Gulf, possibly in response to Britain’s decision to seize an Iranian vessel earlier this month.
British officials will be discussing the crisis later today at an emergency response committee meeting.
Further, a US official said on Friday that the US will destroy Iranian drones that fly too close to its ships.
The increased tensions in the Persian Gulf, a vital international shipping route, could continue to bode well for the black gold.
Prices, however, may drop if tensions ease as fundamentals are aligning in favor of the bears. For instance, oil demand is slowing and there is glut in oil markets, according to Fatih Birol, the Executive Director of the International Energy Agency (IEA).
The agency will be revising lower its 2019 oil demand growth forecast to 1.1 million barrels per day (bpd) from 1.2 million bpd due to a slowdown in the global economy, Birol told Reuters over the weekend.