Expect a higher oil price.
- As the Trump administration turns its screw on Iran, ratcheting up tensions in the Middle East, expect the oil price to once again move higher. While Saudi Arabia and OPEC has a spare capacity of almost 2 million barrels, OPEC members have announced that they do not intend to breach the production agreement reached between OPEC and Russia-led Non-OPEC countries last November, when countries agreed to reduce production by 1.2 million barrels per day, creating a supply shortage in the cash market.
Trade idea:
- Our calculations at FxWirePro strongly suggest that North American benchmark WTI would move higher to retest recent high around $66.5 area. However, the advancement is likely to face heavy selling around $64 area, and $65.3 area.