On the international oil markets, we have seen a bullish sentiment during the last couple of weeks. Monday morning, the price on a barrel of Brent oil has risen above 73 US dollars for the first time this month, and during the last week, the price on the contract has risen around 5 %. The highest price of the year so far was reached on April 24, where the market for a brief period traded above 75 dollars per barrel.
It is first and foremost new tensions in the Middle East, that have caused the upturn. During the last week, the Saudi Arabian oil industry has been under attack, as both tankers and oil pumping stations have been struck by drone attacks conducted by Yemeni insurgents supported by the Saudi Arabian arch enemy, Iran. The attacks did not cause significant damage, but the intention itself is enough to cause an escalation of the conflict.
The attack on the oil tankers happened in the strategically important Hormuz strait, and the markets now fear, that the Iranians will shut down the strait, which sees 20 % of the world’s oil pass through it. This would be interpreted by the Saudis as a very hostile act, and could cause increasing tensions in the region.
Meanwhile, the upside on the market is supported by OPEC’s decision, to continue their production cut deal. At least for the next two months, the organization’s member states will limit their output. On the other hand, the US-China trade war has had a negative impact on the market. When Donald Trump re-imposed tariffs on China in early May, the oil price fell along with the stock markets. The oil market continues to keep an eye on the US-China conflict as negotiations are set to continue this week.