Oil surges to 5m peak in early Tuesday trade

Oil surged to a fresh five-month peak, propelled by escalating geopolitical tensions in the Middle East and reduced supply from Mexico, Blomberg reported on Tuesday.

Brent futures approached $88 per barrel after edging up by 0.5 per cent on Monday, while West Texas Intermediate (WTI) surpassed $84.

Mexico’s state-owned oil firm intends to suspend exports primarily of Maya crude in the coming months.

Moreover, hedge funds are increasingly bullish on crude, as indicated by money managers’ net-long positions on Brent reaching a 13-month high, based on ICE Futures Europe data. Open interest for the contract has rebounded to near late 2021 levels.

Crude has soared 14 per cent this year due to production cuts by the Organisation of the Petroleum Exporting Countries (OPEC+) and its partners countering increased supply from non-member states.

OPEC+ is anticipated to uphold its current output policy at an upcoming review meeting, projected to result in a supply shortfall for the remainder of the year, according to BloombergNEF.

Warren Patterson, ING Groep NV’s head of commodities strategy, noted, “An escalation in tension in the Middle East has coincided with firmer oil fundamentals. The market is tightening thanks to OPEC+ supply cuts, evident in the strength of timespreads.”