Oil prices jump 2% in early trading as tensions in the Middle East mount, Brent crude tops $70
On Friday, Citi global head of commodity research Ed Morse said that Brent prices will top $70 in short order, while Again Capital’s John Kilduff said that if Iraq production takes a hit “oil prices will spike higher.”
I continue to believe that Russia is playing a rather ham-fisted negotiating ploy here, to engineer its share of the cuts being as low as possible. I fully expect them to sign up for the additional cuts, and their share of those, today. Oil has edged slightly lower in Asia as nerves persist, but once Russia agrees, we could see a relief rally of some sort. Overall though, the cuts are there to support prices at present levels, and not to engineer a supply squeeze that changes the structural price outlook for oil.
-- By Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA