Deutsche Bank strategists highlight the pointed two-day rise in Brent crude oil prices, triggered by geopolitical tensions and major policy topics related to the Persian Gulf. Despite this move, the price of Brent crude oil remains well below levels that have previously caused significant stress in the equity and credit markets, with the authors reiterating that previous episodes suggest that vulnerabilities will only emerge once the Brent crude oil price is stable around $110 a barrel at today’s prices.
Oil rally, but stress still narrow
“However, even as the CPI surprised to the downside, oil prices continued to rise, with Brent crude rising another +1.72% to $84.73/bbl yesterday, taking the two-day gain from the weekend to +11.47%.
“Nonetheless, it was well below the intraday high above $87 a barrel, with a big decline after President Trump said the 20% Strait of Hormuz fee proposal would be replaced by “trade and investment agreements that the various Gulf states will enter into with the United States.”
“For the most part, however, there were signs that investors were continuing to eye the latest rally in oil prices.”
“Brent is well below its peak at the beginning of the year, after spending about two months above $100 a barrel.”
“And as Henry pointed out yesterday, at the beginning of the year Brent was trading at $110 a barrel before we saw significant equity and credit sensitivity.”
(This article was created with the aid of an artificial intelligence tool and has been reviewed by an editor. Find out more.)
