Middle East Conflict

It is all to do with tensions in the Middle East raising concerns about supply disruptions, for otherwise the fundamental backdrop for crude oil outlook is far from bullish with the OPEC+ raising supplies and demand growth being weak.

GBP/USD outlook clouded by oil-driven dollar strength ahead of FOMC decision today. Meanwhile, as UK inflation cools this puts the BoE under pressure to adopt a more dovish stance.

The Israel-Iran situation remains tense, keeping Bent oil steady near $75 handle. For the reason, the near-term risks for the EUR/USD forecast remains tilted to the downside.

Wall Street opened lower after US equity futures fell along with European markets overnight, as oil prices rose after Trump called for the evacuation of Tehran. The Dow Jones forecast was further undermined by a soft set or macro data.

The oil market volatility has not been enough to convincingly spark a rally in the dollar yet, which is helping to keep the EUR/USD forecast in an overall bullish direction. But could that change, soon?

Gold may have cooled from its recent highs but make no mistake—the precious metal is far from out of the spotlight.

Following Israel’s strikes on Iran, the dollar bounced back as it took a boost from oil prices spiking, while also benefitting from increased haven demand. The euro and other risk sensitive currencies fell. But it is far too early to declare an end to the bullish EUR/USD outlook.

There is little doubt about the gold outlook which remains positive amid raised geopolitical risks in the Middle East, ongoing trade tensions that don’t seem to go away and multiple other factors. The response of Iran is now going to be key.

Crude Oil Outlook: In October 2024, open interest on Brent oil options surged to a record high as markets hedge against supply concerns stemming from the Middle East, the region that holds nearly 55% of global oil reserves.

Tensions surrounding the Middle East has unsettled markets. US indices such as the S&P 500 are on track for their worst week of the year, crude oil reached a fresh YTD high and the risk-off sentiment was even enough to knock gold from its record. Traders therefore need to be on guard for headline risks surrounding the Middle East next week, alongside the usual bouts of economic data and central bank meetings.

Crude oil outlook boosted above all by OPEC+ supply cuts/ Supply fears re Middle East could intensify again. Oil prices are demand inelastic, which means downside should be limited from fears about weakening global economy.