Iranian attack on vessels reignites market worries, as escalating tensions in the Persian Gulf raise concerns about the safety of shipping routes and the stability of global energy supply. The developments have pushed traders to closely monitor geopolitical risks, particularly their potential impact on oil prices, market sentiment and broader financial markets.
Oil prices supported by escalation in the US-Iranian war
Oil prices rallied yesterday, with WTI reaching at some point $96 per barrel, before correcting lower. The support for oil prices was instigated on a fundamental level, by the Iranian attacks on US and European vessels in the Persian Gulf. Practically the Iranian attacks highlighted how unsafe the navigation of ships in the area is which in turn limited if not halted the sailing of ships through the Straits of Hormuz.
Market worries for the supply side of the international oil market were re-ignited and oil traders are on the edge of their seats for further developments. On the other hand we have to note that the rise of oil prices may be somewhat uncalled for as IEA seems ready to replace any oil production losses from the closing of the straits of Hormuz.
Xcellence Research Team opinion
Should we see further escalation of the war in Iran and Iranian threats of commercial vessels in the area intensifying, we may see oil prices getting more support and vice versa, possible easing of the oil market’s worries for the strain on oil supply chains easing, we may see oil prices losing some ground.
Bitcoin drops below $70k
The intensification of the market’s cautious sentiment weighed somewhat of Bitcoin’s price which at some point dropped below $70k. Overall, the upward motion of the crypto king seems to have been interrupted which seems now to remain relatively stable.
Xlence Research Team opinion
In general the risk off market sentiment seems to be weighing on the crypto-market and Bitcoin in particular, while a more risk on market approach may provide tailwinds, given the market’s perception of the crypto market having a riskier nature. It may take something more specifically crypto related fundamental issue to move Bitcoin’s price substantially.
Risk off sentiment weighs on US stock markets
The market’s cautiousness weighed on US stock markets as well with all three major US stock market indexes, Dow Jones, Nasdaq and S&P 500, being in the reds, yesterday and during today’s Asian and European sessions. Overall the issue tends weigh on US equities in various ways as it raises oil prices, thus higher inflation and a more hawkish approach by the Fed is expected. Also high oil prices tend to create uncertainty in the markets and the current business conditions making businesses more cautious in regards to expanding.
Xlence Research Team opinion
Should we see market worries for the level of oil prices intensifying, we may see US equities retreating further, while a possible easing of the market’s anxiety could allow US stock markets to rise.
The USD continues to rise in the FX market
In the FX market the USD strengthened notably yesterday. The release of the US CPI rates for February made no impression on the market as they came in as expected, with the core rate remaining unchanged at 2.5%yy and the headline rate at 2.4% yy, as was widely expected. On the other hand the markets’ uncertainty allowed the USD to strengthen given its safe haven qualities. We also note on the FX market the weakening of the JPY against the USD and intend to keep an eye out for any market operation by Japan, aiming at strengthening its currency.
Xlence Research Team opinion
Should we see market worries intensifying further we may see the USD getting even more support while a possible easing of the market’s worries could weigh on the greenback.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
