Brent: War premium drives gains – Danske Bank

Danske Research Team highlights that escalating Middle East tensions and US policy signals are lifting Oil prices, with Brent Crude trading near 115 USD/bbl in early Asian dealings. Team links Trump’s comments on Iran’s Kharg Island and increased Pentagon deployments to elevated tail risks for energy markets and notes that higher Oil prices are weighing on global growth sentiment and risk assets.

Oil jumps as Iran war escalates

"Middle East tensions have escalated sharply as Trump, in a Financial Times interview, suggested seizing Iran's Kharg Island, which handles 90% of its oil exports, a potential shift from airstrikes to direct resource control."

"US ground deployment considerations significantly elevate tail risks, given Iran's advanced missile and drone capabilities alongside the vulnerability of fixed assets."

"Brent Crude rose to around 115 USD/bbl during early Asian trading."

"Concerns over the growth implications for the continued rise in oil prices dominated discussions, in an almost textbook risk off session due to demand destruction concerns."

"The combination of energy prices taking another leg higher on renewed escalation risks in Iran and the fact that it increasingly looks likely that central banks will hike policy rates into a slowing economy sets the tone in FI and FX markets."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)