Brent crude futures hit $71.34 per barrel on Tuesday, their highest level since November 2018, before retreating slightly on concerns that the global economic slowdown would reduce demand and tighten the commodity market. Still, Brent crude futures were trading higher just after noon in Asia, up 0.13 percent to $71.19 per barrel as of 12:48 p.m. HK/SIN. U.S. WTI futures were up 0.20 percent.
Despite lingering concerns about the state of the global economy, oil prices were supported by political unrest in Libya, where rebel forces launched a surprise attack against the country’s UN-recognized government last week. The attack could potentially bring back the country’s civil war and threaten the country’s oil output, which would contract supply and send prices even higher. A warplane attacked Tripoli’s lone airport on Monday, escalating tensions further.
Another threat to oil prices is the continuing tension between Washington and Tehran. On Monday, U.S. President Donald Trump called Iran’s Islamic Revolutionary Guard Corps a terrorist organization, while U.S. Secretary of State Mike Pompeo recently called for the “complete obliteration of Iranian exports.” Still, despite these calls, analysts are concerned that the constricted oil market will demand the reintroduction of Iranian oil into the markets in an effort to push prices lower.
According to reports by CNBC, Jeff Currie, Goldman Sachs’ head of commodities research predicts that oil won’t be returning to the $86 per barrel level it saw last year anytime soon. “This market is in a million barrel per day deficit right now,” he said. “And we think upside price is $70 to $75, but the back end anchored around $60.” He credited the lower price potential to the increase of production out of the United States in 2018.