Having gained around 5% last week, Brent Oil and Crude Oil both opened with strong gains when markets reopened on Monday, as heightened tensions in the Middle East prompted fresh bullish activity in Oil.
After a fourth consecutive week of gains for oil, Crude oil is up 1.97%, trading at $60.23 a barrel and Brent oil is up 1.34%, trading at $63.64 at the time of press.
Boosting prices was increased tensions between Saudi Arabia and Iran in their proxy war being fought in Yemen. Saudi state tv reported on Sunday that the Saudi-led coalition fighting in Yemen said that it intercepted and destroyed an explosive-laden drone fired by the Iran-aligned Houthi group towards Saudi Arabia.
Iran may be feeling emboldened by the dovish stance being held on Iran, the world’s largest state sponsor of terror, by the new Biden administration. Dubbed ‘Obama 3.0’, there appears to be a continuation of the appeasement politics synonymous with the previous Obama administration.
Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co. said:
“An early spike in oil markets was triggered by the news,”
“But the rally was also driven by growing hopes that a U.S. stimulus and easing of lockdowns will boost the economy and fuel demand,”
According to OPEC, Saudi Arabia possesses around 17 percent of the world’s proven petroleum reserves. Meanwhile, Iran is ranked the fourth-largest oil producer in the world. Should tensions increase further, there is every concern that production and distribution could be impacted and force prices to rise even further.
The last time Brent oil prices were higher than $63 was in early January 2020.
