No one likes to see death and destruction….but the Middle East has been a powder keg for hundreds of years.
The risk of a blow up never went away yet the risk factor had been almost completely removed from the price of Brent at US$60.
The price of Brent was also factoring in a pretty pessimistic outlook for economic growth (particularly China)
US$60 Brent (and WTI) is also around the point that US shale producers struggle with their margins.
So oil as a commodity was just sitting there priced at a point where it was ripe for an upturn anyway…..and this move by Israel has been the kicker.
I, like many I’m sure, had my moments where I wondered whether to just cut my losses on WDS…..particularly with the relentless attack on the sector in Australia…..pleased I stayed patient.
I’m not convinced these developments will take oil into the $US80’s and $US90’s (and WDS north of $30 with it) …..but I think the risk premium has been reintroduced and I think that’s appropriate. This should keep Brent at $US70 plus and WDS at $25 plus for a while.
WDS Price at posting:
$25.21 Sentiment: Hold Disclosure: Held
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