Investing.com – Oil prices rose in Asian markets today. After being supported by supplies that may become less in the coming months. This comes despite a decline in tensions between Iran and Israel, prompting traders to price a risk premium on crude oil.
Crude oil prices fell to a three-week low on Monday. This comes amid growing confidence that Iran and Israel will not enter into an all-out war. Fear of this situation was considered a major factor that led to the rise in oil prices in the last session.
But traders still expect the oil market to tighten further in the coming months. Especially after the recent production cuts in Russia. Now the demand for fuel in the United States will increase in the spring.
The United States also tightened oil export sanctions on Iran.
The index, due in June, rose 0.4% to $87.39 a barrel, while rising 0.5% to $82.32 a barrel at 20:53 ET (00:53 GMT). Both indexes hit three-week lows on Monday
Investors are pricing in a low-risk premium from oil prices.
Iran has shown no signs of retaliation against Israel after the latest attack. At the same time, he remained silent about the full implications of the attack.
This has raised hopes that the two countries will end hostilities. As a result, the political environment in the Middle East has become more stable. This situation has led traders to continue to price lower risk premiums from oil prices.
Fears of war between Iran and Israel sent oil prices to their highest level in six months in early April. This is because the market believes that there will be supply disruptions due to the expanding war in the Middle East.
Although the chances of this happening seem less. But there is still potential for further aggression. Especially as Israel continues to attack Gaza.
The Iraq-based group also claims it will increase missile attacks against the United States. and partners in the region
Oil demand will rise in the American spring
Despite the recent losses, oil prices remain relatively buoyant amid expectations that supply will become tighter in the coming months.
Last month, Russia reduced its fuel exports amid Ukraine's attacks on major fuel refineries. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC+) is maintaining production cuts until at least the end of June.
The bets on supply shortages are exacerbated by plans to limit Iranian oil exports. But it is still unclear how strict this will be. Due to high gasoline prices in the United States. It has become a controversial topic for the Biden administration.
The American Spring's imminent arrival is expected to stimulate increased demand within the country. American refinery activity has recovered in recent weeks. Meanwhile, domestic gasoline stocks continue to decline.
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