Are markets misreading oil's slippery risks?
USO•Oil rose more than 2% as market moves remained closely tied to crude amid conflict-related supply concerns. DeVere Group CEO Nigel Green said prices were pricing in peace that had not arrived, while Goldman Sachs said escalating tensions pose significant upside risks.
1. Oil and market moves
Since the US and Israel declared war on Iran on February 28, crude has largely dictated market moves, with falling oil easing inflation concerns and rising prices raising fears of tighter Federal Reserve policy. On Monday, the Dow gained while the S&P 500 and Nasdaq dipped; energy led sector gains, and US crude rose more than 2%.
2. Supply risks persist
DeVere Group CEO Nigel Green said the oil market was pricing in peace that had not arrived, pointing to the Russia-Ukraine energy infrastructure announcement and a similar ceasefire deal in September that he said barely lasted a week. He also cited hurricane season, which had led producers to shut down about 63% of Gulf of Mexico oil output, and continued Houthi strikes on Saudi Arabia.
3. Goldman sees upside risks
Goldman Sachs said adaptation to Middle East supply would eventually reduce oil prices, but that the possibility of escalating tensions still posed significant upside risks.
