Chart of the week: keep watching
Data-driven insights and analysis from our investment team every week.
Three weeks ago, the oil price was spiking upwards due to rising tensions in the Middle East. Thankfully, a ceasefire between Israel and Iran has come into effect, reducing tensions in the region. As a result, we had a sharp correction in the oil price, a drop of 15% over five days. This has come as a relief to asset markets.
However, you can see in the chart below that the price has started to creep upwards again. That is despite persistent rumours that OPEC+ is going to raise production quotas again and oil inventory levels are high in the US. There are a few suggested reasons for the rise. It could be a stabilisation in the price after a sharp move or lingering worries around the stability of the Israel/Iran ceasefire. Furthermore, we are at the peak of the hurricane season in the Gulf of Mexico, and people are fearful of disruption to oil supply in the area. A reasonable fear but one that should pass quickly.
If the oil price is still moving up in a month’s time, there could be something else going on.
