WTI oil prices fell at the start of European trading after previously rising above US$67 for the first time in six months. The price per barrel is up almost 5% so far this week, supported by growing fears of a large-scale U.S. military strike against Iran.
The situation is increasingly coming to a head as a second U.S. aircraft carrier group approaches the Middle East, while talks between the two parties are making no significant progress. One likely consequence of a full-scale military confrontation in the Persian Gulf would be the closure of the Strait of Hormuz to maritime traffic, effectively cutting off oil supplies from one of the world’s leading producing regions.
Against this backdrop, crude oil traders have begun hedging against the risk of a sudden reduction in global supply by increasing their positions in futures contracts, which could create room for further price gains, particularly if tensions continue to escalate.
Ricardo Evangelista – Senior Analyst, ActivTrades
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