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Brent oil (UKOUSD) briefly breached $100 again today
IEA reserves release doing little to calm fears of global oil shock
Tanker attacked in Iraqi waters, Oman evacuates oil terminal, China curbs fuel exports
Fears of global oil shock is sapping risk sentiment across global markets
Goldman Sachs, Commonwealth Bank of Australia foresee new record high for Brent if Middle East conflict drags on
The global oil benchmark, Brent oil (Bybit: UKOUSD), briefly blasted back above $100 a barrel as the Middle East conflict enters a dangerous new phase:
Two tankers were attacked in Iraqi waters
Oman evacuated its main oil export terminal
China - the world's biggest oil importer - has tightened curbs on fuel exports while its top processors have stopped signing new contracts
These latest developments in the Iran war are feeding fears of a global oil shock.
Brent briefly skyrocketed over 10% before paring gains to trade around the mid-$90/bbl range at the time of writing.
READ MORE (published March 9th): Oil hits $100! Why is the world freaking out?
Oil's surge is also denting broader risk appetite:
SP500: briefly dipped below the 6750 crucial support we had highlighted since Sunday, March 1st
NAS100: down 0.60% — testing its 21-day simple moving average (SMA) for critical support
Gold (XAUUSD+): $5,166, -0.20% — falling despite war as inflation fears sour Fed rate-cut hopes
USDJPY+: resisted around the 159.00 big, round number once more
EURUSD+: 1.1539, down 0.1%
GBPUSD+: 1.34, down 0.1%
The Euro and British Pound are set for 3rd straight day of losses against the US dollar respectively, as the latter strengthens on safe-haven flows.
Major cryptos, however, are staying relatively resilient despite the ongoing Iran war:
Bitcoin (BTCUSDT): holding around the psychologically-important $70k level, still about 6.7% higher since the US and Israel first attacked Iran with the latter then retaliating across the Gulf region.
Ethereum (ETH/USDT): holding above the psychological $2,000 level
READ MORE (published March 4th): US dollar vs. Bitcoin - which is the ultimate safe haven?
The International Energy Agency (IEA) agreed to discharge 400 million barrels from emergency oil reserves, the largest reserves distribution in history!
The goal of sending out more oil into the world is to bring down crude prices.
However, the IEA's agreed release did little to calm markets, because:
Analysts expect that this release may take up to 2 weeks to actually reach global markets.
The actual amount released is likely less than the estimated 10 million - 20 million barrels of oil lost with each passing day in this Iran war, according to experts. For comparison, the maximum that the US (the country with the biggest reserves of the 32-member nations in the IEA) can release from its reserves is just 4.4 million barrels a day.
The world consumes about 100 million barrels of oil per day.
Hence, after the IEA's announcement, oil prices jumped anyway as traders realized the supply disruption is far from over.
Oil-price movements will likely be largely dependent on geopolitical developments in the Middle East.
The risk of disruptions to energy supplies from the region is likely to remain high if the conflict continues, particularly for oil shipments through the Strait of Hormuz, a key chokepoint that carries roughly 20% of global oil supply.
Sustained high oil prices may push some central banks toward a hawkish monetary policy pivot - raising interest rates or at least eschewing rate cuts.
In Asia, rising oil prices would raise the odds of policy tightening in Singapore and Malaysia, while reducing the likelihood of rate cuts in Indonesia.
Among major western economies, markets now fully expect the European Central Bank (ECB) to hike rates in the 2nd half of the year, while forecasting just 1 more Fed rate cut in 2026 - compared to 2 Fed rate cuts this year fully expected just a month ago.
As things stand, Brent highest-ever price was recorded at $147.50 back in July 2008.
Goldman Sachs expects Brent to surpass its 2008 peak if the oil supplies through the Strait of Hormuz are choked off through the end of March.
Commonwealth Bank of Australia expects Brent to reach $120-$150
Revisiting forecasts we previously cited on March 9th:
Bloomberg Intelligence: $133
JPMorgan: $120