Oil Prices Supported by Middle East Hostilities
USOIL Analysis
"Iranian-backed Houthi terrorists" attacked oil tanker M/V Marlin Luanda on the Gulf of Aden on Friday, according to US Central Command [1]. The ship is operated on behalf of commodities trading giant Trafigura, which continues to "assess carefully the risks involved in any voyage" [2]. This was just the latest hit against commercial vessels in the region by the Yemen-based Houthis, designated as a "Specially Designated Global Terrorist group" by the United States [3]. The Gulf of Aden leads to the Red Sea, which is the entry point to the Canal Suez, a critical path for global trade.
At the same time, tensions between Washington and Tehran escalated after an attack in a US base in northeast Jordan on Sunday. The hit led to the death of three US service members and left at least thirty-four injured [4]. US President Biden accused Iran for the attack, saying that it was carried out by "radical Iran-backed militant groups" and vowed to "hold all those responsible to account at a time and in a manner our choosing" [5]
These developments can disrupt oil supply and support prices, as OPEC+ has implemented additional curbs in the first quarter of the year. As a result, USOil heads towards the conclusion of its first profitable month since September. It tests the critical 38.2% Fibonacci of the last leg down, which brings 84.90 in the spotlight.
On the other hand, the International Energy Agency sees a "a reasonably well supplied" market this year and raised its forecast to growth of 1.5 million barrels per day (mbpd), while seeing demand expansion to ease from 2.3 mbpd in 2023 to 1.2 mbpd in 2024 [6]. Furthermore, the advance of USOil appears stretched and a rejection of the crucial 38.2% Fibonacci could lead to a breach of the EMA200 (at around 74.00), although steeper fall that would threaten 67.69 does not look easy under current conditions.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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