West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $67.90 on Tuesday. The WTI price recovers amid the rising geopolitical tensions in the Middle East after the downfall of Syrian President Bashar al-Assad.
Over the weekend, Syrian President Bashar al-Assad and his family fled to Moscow and were granted political asylum, ending 50 years of a brutal dictatorship. The downfall of the Syrian leader regime could lead to a conflict involving regional countries, lifting the WTI price.
Tomomichi Akuta of Mitsubishi UFJ Research noted that these geopolitical risks are bolstering crude prices but warned that Saudi Arabia’s recent price cuts and extended OPEC+ output constraints underscore weak demand fundamentals, especially from China.
Additionally, the black gold might be supported by the rising expectations that China will announce further stimulus measures and will unveil its first “moderately loose” monetary policy shift since 2010. “The easing of monetary policy stance in China is likely the driver of the oil price rebounding, supporting risk sentiment,” said UBS analyst Giovanni Staunovo. On the other hand, the Federal Reserve (Fed) is likely to deliver another interest rate cut on December 18. Still, the US economic data will force the Fed’s outlook on interest rates to tilt more hawkish. This, in turn, might support the Greenback and weigh on the USD-denominated Canadian Dollar (CAD). More By This Author:EUR/USD Holds Below 1.0600, US NFP Data In The Spotlight USD/CAD Softens Below 1.4050 As Traders Await US NFP Data Australian Dollar Remains On The Defensive As Weaker Data Spurs RBA Rate Cut Speculation
