Oil opened the new week with a huge gap higher, as investors absorb the shock coming from a drone attack on two major oil facilities in Saudi Arabia. The biggest intraday jump in 30 years is now opening doors to many speculations on oil futures. Investors that are trying to understand if this is an isolated event or if it is realistic to expect further episodes like this.
Moreover, this attack is likely to boost tensions between Iran and the U.S., so more geopolitical risk needs to be priced in. In this convulse scenario, WTI jumped as much as 15%, while Brent reached a peak of +19% before consolidating around slightly lower levels. WTI has now fallen below $60, and could target the support level of $58, where prices have big chances of rebounding, as risks remain high.
However, there is a certain level of confidence that there shouldn’t be major supply problems, at least if the current scenario is unchanged. This was also supported by what Saudi Aramco told Indian refiners: the producer was reassuring them that there won’t be supply shortages. It is clear that we can now expect higher volatility on oil, with huge uncertainty surrounding this commodity.
