Oil Rises as Tehran Confirms Iranian President Death
Oil prices spiked on Monday after Tehran confirmed the deaths of Iranian President Ebrahim Raisi, and other officials in a helicopter crash in the country’s northwestern province. ICE Brent crude traded at $84.24 per barrel, up by 0.31% from the closing price of $83.98 per barrel in the previous trading session.
American benchmark West Texas Intermediate (WTI) traded at $79.81 per barrel at the same time, a 0.29% increase from the previous session that closed at $79.58 per barrel.
The helicopter carrying the Iranian president, the country’s foreign minister, and their entourage crashed in the East Azerbaijan region of northwest Iran on Sunday afternoon.
After a night-long search operation hampered by bad weather, Iranian Deputy President for Executive Affairs Mohsen Mansouri said in a statement on X that all onboard, including the president, foreign minister, accompanying delegation, and helicopter crew, had died.
Supply fears in favor of higher oil prices were stoked by worries about the political fallout in the oil-producing country and how it might affect decisions to be made at the June 1 meeting of the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+.
According to the latest OPEC report, over 3 million barrels of oil are produced daily in Iran. Meanwhile, hope of the US Federal Reserve’s (Fed) starting interest rate cuts this year continues to influence oil prices.
With a current 65% probability rating for a Fed interest rate decrease in September, financial markets are beginning to reflect this forecast in pricing, while bolstering trade and prices as a weak US dollar rate makes oil trade cheaper for other currency holders.
Strong economic activity in China and growing expectations that Fed will decrease interest rates continue to influence prices
Furthermore, robust economic data from China, signaling high oil demand, is supporting price increases. The world’s second-largest oil consumer and largest importer announced plans to start issuing subsidized bonds worth 1 trillion yuan last week.
Oil prices remain range bound last week. Brent settled 0.85% higher on Friday, but oil prices have traded in less than a $83.50 per barrel range since early May.
To the upside, the market will likely face resistance along the 200-day moving average, ING commodities strategists said in a note on Monday.
“We might have to wait for further clarity from OPEC+ and its output policy for the second half of the year to provide any impetus to the market and for it to break out of its recent range”.
Analysts noted that a fair amount of speculative selling in ICE Brent occurred over the last week. Positioning data shows that speculators sold 47,146 lots over the last reporting week, leaving them with a net long of 213,502 lots as of last Tuesday.
The move was predominantly driven by longs liquidating. However, for NYMEX WTI, speculators increased their net long by 11,095 lots over the week to 128,746, largely due to short covering, according to ING note. Naira Steadies as Banks Issue Update on FX Purchase
