Oil Under Pressure: Rising U.S. Inventories Dampen Geopolitical Tensions’ Impact

Oil prices declined due to an increase in U.S. crude inventories, despite escalating geopolitical tensions in the Middle East.

Contents

Oil Prices
Nuclear Talks
Markets
Gold

Oil Prices

Oil prices dropped significantly following official data showing a second consecutive weekly increase in U.S. crude inventories,
reaching their highest levels since July. This rise in stockpiles pressured prices, even amid heightened geopolitical tensions.

The decline came as CNN reported that Israel is considering launching a strike on Iranian nuclear facilities,
stirring concern across markets.
However, the impact of this news was not enough to outweigh the bearish inventory data.
West Texas Intermediate (WTI) crude fell by 0.7%, settling below $62 per barrel, while Brent crude also declined, trading below $65.

The pressure wasn’t limited to energy data. Weak demand in a U.S. Treasury bond auction further fueled anxiety in financial markets,
reinforcing the downward trend in oil.

Nuclear Talks

Widespread Anticipation Surrounding U.S.-Iran Nuclear Negotiations

Against this backdrop, investor attention remains focused on ongoing nuclear negotiations between the U.S. and Iran.
A successful agreement could pave the way for additional Iranian oil to return to global markets,
potentially exacerbating oversupply, especially as the second half of the year is expected to see a surplus.

Any potential military escalation by Israel could derail these talks and reshape dynamics
in the Middle East—a region that supplies about a third of the world’s oil.
However, CNN reported that no final decision has been made yet regarding any strike,
citing unnamed American intelligence sources.

Bjarne Schieldrop, chief commodities analyst at SEB, noted that the market has not yet priced in serious concerns
about this scenario, saying the recent price movements remain limited compared to the magnitude of potential risk.

Markets

Caught Between Oversupply Fears and Geopolitical Risk Support

Despite concerns over increased output, especially with OPEC+ planning further production hikes,
geopolitical risks continue to offer a support base for prices.
However, a Bloomberg Intelligence report suggested WTI crude could fall to $40 per barrel if sanctions on Iranian oil exports are lifted.

According to Goldman Sachs, Iran has managed to boost its oil exports despite existing sanctions,
recently increasing its output by around one million barrels per day.
Samantha Dart, co-head of global commodities research at Goldman Sachs,
stated in a Bloomberg interview that removing this volume from the market could push prices up by approximately $8 per barrel.

Gold

Extends Gains for Fourth Consecutive Day Amid Economic Concerns

Gold prices recorded gains for the fourth consecutive day, driven by growing concerns over U.S. President Donald Trump’s tax cut plans,
which could potentially worsen the federal deficit.
These fears have pushed long-term U.S. Treasury yields to their highest levels in nearly two decades.

At the start of Asian trading, gold rose to approximately $3,325 per ounce, as investor appetite for safe-haven assets increased.
This came amid a cautious mood in equity markets and a weakening U.S. dollar.

As of 8:42 a.m. in Singapore, gold had climbed 0.2% to $3,322.63 per ounce. Meanwhile,
silver and palladium prices also rose, while platinum prices edged lower.

Oil Under Pressure: Rising U.S. Inventories Dampen Geopolitical Tensions’ Impact

Oil Under Pressure: Rising U.S. Inventories

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