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Geopolitical Fear Factor Leads Brent Premium to Widest This Year

Geopolitical Fear Factor Leads Brent Premium to Widest This Year

(Bloomberg) -- Geopolitical risks from Iran to Israel have led the global benchmark’s premium over West Texas Intermediate crude to widen, with the spread set to close at the largest since 2015.

Brent crude is holding close to $78 a barrel following President Donald Trump’s announcement last week that the U.S. will withdraw from the Iran nuclear accord and reimpose sanctions. Traders are waiting to see exactly how sanctions will further tighten global supply levels, while also assessing conflict on the Gaza Strip border.

The fear of potential supply disruptions and further geopolitical conflicts developing will have more of an impact in the Brent markets, according to Tariq Zahir, a commodity fund manager at Tyche Capital Advisors LLC.

Geopolitical Fear Factor Leads Brent Premium to Widest This Year

Front-month Brent crude traded at a $7.05 premium to WTI at 12:03 p.m. in New York and is set to close at the widest level since 2015.

--With assistance from Michael Roschnotti

To contact the reporter on this story: Jessica Summers in New York at jsummers24@bloomberg.net.

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Mike Jeffers, Joe Carroll

©2018 Bloomberg L.P.