Brent: War headlines drive sharp swings – Deutsche Bank

Deutsche Banks Jim Reid and team note that Brent Oil has fallen sharply as hopes build for a deal to end the Iran war, with prices dropping back below $100. The bank links recent Oil weakness to reduced stagflation fears and lower inflation expectations.

Iran conflict headlines steer Oil prices

“Since the weekend, the real hope is that the days may also be numbered for the war in Iran as well, with momentum building since the start of the weekend that a deal could be in the works. Brent, which ended last week at $103.54/bbl, is this morning trading at $97.87/bbl, around -5.48% lower than Fridays close.”

“However, Brent had got as low as $96.02 late yesterday before news overnight that US and Israeli jets conducted fresh strikes in Southern Iran, hitting missile launch sites and mine-laying boats.”

“Recapping last week now, more for those who were off yesterday. Markets put in a strong performance overall, as hopes mounted for some kind of US-Iran deal. So that raised investor expectations that the Strait of Hormuz might reopen in the weeks ahead, which helped to bring down oil prices.”

“Indeed, Brent crude fell -5.24% last week to $103.54/bbl, whilst WTI fell -8.37% to $96.60/bbl.”

“That decline in oil prices meant investor fears eased about a stagflationary shock to the global economy, supporting bonds and equities on both sides of the Atlantic.”