The price of oil made a remarkable comeback on Thursday, after fresh US-Iran tensions erupted. The development also helped equities advance, after US labour market figures provided a glimmer of hope for the world’s top economy.
At one point, the US crude oil benchmark, WTI, was up by 20 percent on the day, having earlier this week plunged below zero.
“Heightened risk in the Middle East” triggered the upturn, analysts at Phillip Futures said, after US President, Donald Trump, tweeted that he had “instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea”.
Meanwhile, Iran said it put its first military satellite into orbit.
Washington alleged that the space programme is a cover to develop ballistic missiles.
Short of halting the world’s oil production, there is little producers can do to help the oil price, Ipek Ozkardeskaya, a senior analyst at Swissquote Bank said.
“One other option is to fuel geopolitical tensions in the Middle East, to threaten supply and support prices.
“This is what Donald Trump is doing right now,” she said.
The tensions offset news of another surge in US crude stockpiles, as the pandemic crushes demand for energy.
“Oil prices are enjoying another little bounce on Thursday but don’t be fooled, at these levels, the percentage change can be very misleading,” cautioned Craig Erlam, an analyst at Oanda.
“Things were looking up as the price doesn’t start with a minus”, he stated,
“But I wouldn’t bet against visiting those depths again.”
