Oil soars and USA equities drop as geopolitical tensions reach breaking point

Jeannie Matthews
April 14, 2018

On Wednesday both Brent and WTI hit their highest levels since late 2014, at $73.09 and $67.45 a barrel respectively, after Saudi Arabia said it had intercepted missiles over Riyadh and US President Donald Trump warned Russian Federation of imminent military action in Syria.

Brent surged more than 3 per cent on Tuesday to hit its highest level since late 2014, at US$71.34 a barrel.

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The prices last Friday suffered their worst weekly decline in two months after they followed plummeting equity markets amid growing fears of a trade war between the US and China, the world's two largest economies.

Last night, USA stockpile data from the Energy Information Administration (EIA) sent oil markets into increased volatility.

As crude production in the North Sea continues to evolve, its role in an increasingly globalized market has started to shift, having an impact on Dated Brent and its position as a global oil benchmark.

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Prices were also impacted by reports that Saudi Arabia intercepted missiles over Riyadh fired by Yemeni Houthi rebels.

Oil prices jumped to their highest point in three years yesterday, amid fears of possible Western military involvement in the Syrian conflict, before edging slightly down earlier today.

The market is also keeping an eye on developments out of Syria, after reports an air base near Homs was struck by missiles.

Oil prices remain supported by easing concerns over a prolonged trade dispute between the USA and China after China's President Xi Jinping gave a speech on Tuesday with a conciliatory tone.

The U.S. Energy Information Administration (EIA) said on Tuesday that it expects domestic crude oil production in 2019 to rise by more than previously expected, to 11.44 million bpd.

On Thursday, OPEC said the global oil stocks surplus was close to evaporating due to healthy energy demand and its own supply cuts. Analysts polled by S&P Global Platts forecast a 100,000-barrel increase in stockpiles and a 2 million-barrel decline in gasoline stockpiles. -China tensions appeared to ease, but concerns over USA production growth lingered in the wake of a hefty weekly rise in domestic rig activity.

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