Global benchmark Brent experienced a slight dip on Wednesday, hovering around $83 per barrel, but marked an overall gain of over 7% for the month. Meanwhile, West Texas Intermediate approached $77 per barrel. The market is on edge, awaiting a response from the United States following a drone attack that claimed American lives in Jordan over the weekend.
President Joe Biden has confirmed that a decision has been made on how to respond, but details remain undisclosed. He pointed the finger at Iran for supplying the weaponry used in the attack, a claim Tehran vehemently denies, urging diplomatic solutions to ease tensions.
The market’s future direction hinges on Biden’s next move, according to Will Sungchil Yun, a senior commodities analyst at SI Securities Corp based in Seoul. With US lawmakers pressing for retaliation against the drone strike, the president faces the delicate task of projecting strength without triggering an unwelcome surge in oil prices, especially in an election year.
The recent surge in oil prices is attributed to an escalation of attacks in the Red Sea by Houthi rebels based in Yemen. However, concerns about robust supply and wavering demand from major consumers, notably China, have limited the extent of these gains. Saudi Arabia’s unexpected decision to backtrack on plans to increase output has also cast doubts on the long-term demand outlook.
