The oil price has fluctuated considerably this week. There was a brief lull in the rally as a large number of traders decided to sell. However, the market soon picked up momentum again as further escalation in the Middle East still looms.
The oil price has fluctuated up and down this week, only to return to roughly the same point. On Thursday, April 4, oil traded at $90,65 per barrel. A day later, oil prices reached their highest point of the week at $91,17. The price then dropped to $89,42 on Tuesday, April 9. At the time of writing (Thursday, April 11), the price of oil has risen again to $90,58.
There was a brief pause in the oil market rally this week. One reason for the decline was a sharp increase in oil reserves in the United States. In total, US reserves increased by 5,84 million barrels. A Reuters poll showed 2,37 million barrels expected.
In addition, many traders decided to sell. CNBC also reports that many traders who entered at low prices have chosen to cash in their profits. At its peak, the European Brent benchmark was as much as 16% higher than at its trough, while the US WTI is up 19%. Remarkably, the prices of the Brent and WTI benchmarks are almost the same. In general, oil is a lot more expensive on the European market, as the United States is a major producer and Europe is a major importer.
Conflict with Iran
The impending conflict between Israel and Iran remains the most dominant factor. Although Iran has not yet retaliated against the alleged attack on the embassy in Syria, actions by the oil state are still hanging over the market. In the event of a direct conflict, significant scarcity could arise. Iran is OPEC's third largest oil producer. Although the country mainly exports to Asian markets, Western countries could also experience disruptions. If Iran produces less oil, Asian countries will be forced to make up for the shortages by buying more oil in markets that Western countries trade with.
Later in the week the fire was stoked again, after it became known on Wednesday April 10 that the secret service had warned Israel about drone and missile attacks. In addition, several companies are beginning to anticipate a direct confrontation between the two countries. For example, Lufthansa has announced that it will stop its flights from Tehran.
In the meantime, the diesel price has actually taken a significant step downwards. On Thursday, April 4, diesel traded for €134,97 per 100 liters. On Friday, April 5, the price peaked at €135,97. After that, the diesel price took a sharp step down, to €132,92. The fact that the diesel price is falling somewhat more sharply than the price of crude oil is because the situation in Iran has little influence on the diesel market. Iran mainly exports light oil, which is used for gasoline.