The winds of war that are blowing ever stronger across the Middle East do not seem to impress the markets. Raw material indices are also holding up, being the first to suffer as international tensions grow. Despite weak trade in Asia, fears of a broad regional conflict do not appear to have influenced the stock markets, which are rising although cautious. A trend observable in European and overseas markets, with European stock markets declining following the prudence of Wall Street but continuing to run. According to analysts, it was provoked by Tehran which considers “the mission in Israel concluded”. A clarification that changed the alarming picture of the oil and gold markets taken immediately after the Iranian attack against Israel, with crude oil reaching above 90 dollars a barrel and gold at its maximum at 70 euros per gram. At least for now.
This is demonstrated by the composed and moderate reaction of oil to the reopening of trade, with the American WTI at 85.19 dollars a barrel and the Brent of the Nor Sea below 90 dollars. A perhaps unexpected slowdown for a market like that of crude oil, but influenced in part by the repercussions already felt last week. In fact, many had already perceived on Friday the arrival of retaliation after the Israeli assault on the Iranian embassy in Syria on April 1st. “The fears of a much broader regional conflict in the Middle East have only partially influenced the climate of confidence in the markets, because the Iranian response, after the Israeli attack on Tehran’s embassy in Damascus, was contained”, says Filippo Diodovich, Senior Market Strategist at IG Italia. “Israel’s possible response” could “only involve Iranian proxies (Hezbollah) but not an escalation of the conflict with a direct attack on Tehran”.
Yet the slowdown in oil prices could still be interrupted in the next few days with a new rise up to 130 dollars a barrel. The reasons? On the one hand, the consequences that an escalation risk – albeit scaled down – could have on crude oil supplies from the Middle East. On the other hand, the possible impact on maritime trade through the Strait of Hormuz, where approximately 1/5 of the oil consumed globally passes.
What is alarming, however, is not only a possible increase in prices, but also the scarcity of oil, as confirmed by Federpetroli. “We are worried not so much about the price increase, because for us an optimal price is from 100 to 110 dollars a barrel. The crisis is not about the price but about the availability of the product”, underlined the president of Michele Marsiglia. “At the moment prices have not undergone strong volatility and therefore rebounds but if the escalation continues and without a clear political directive, it is obvious that there will be an increase. We must not forget – he observes – that “Iran could also close some sections of navigation: if he were to carry out a maneuver of this kind, it would put the entire European side in difficulty”.
However, it is not only oil that is experiencing the consequences of the tensions between Israel and Iran but also gold, which also remains stable with June futures above 2,370 dollars an ounce. Nothing to do with the historical record of 2400 dollars – both on the spot and forward markets – recorded last week. However, this is a price that will guarantee the “safe haven” par excellence to continue to grow, with an exchange at 2,360 dollars per ounce and a partial correction for the Gold future expiring in June 2024. A price, which together with that of the crude oil slowing down, averts any leaps in raw materials, but not in commodities, with gas at +1.4% changing register, consolidating above 31 euros per megawatt hour.
Iranian attack on Israel, missile debris on the street in Amman
Tags: Markets nervous escalation Middle East Compound reaction gold oil
