Oil Down, Tech Down, Investors Nervous
Additional Iranian supply is weighing on crude while global equities move lower and traders shift toward a more defensive posture.
It’s a cool morning so far here in Trinidad. It’s just after 5:00 AM, coffee is in hand, Morning Call is on the screen, and for once the dogs aren’t engaged in active combat with the vacuum cleaner. They’re both snoring away on the couch beside me, which I’ll take as a positive start to the day.
The overnight news flow was anything but quiet. The United States reportedly eased sanctions on Iranian oil, granting a 60-day waiver, while Ukraine launched another major drone attack across southern Russia and Crimea, hitting multiple targets. Geopolitical tensions remain elevated, but for now the energy market appears more focused on increased supply than escalating conflict.
The potential return of additional Iranian barrels into the market is helping to cap crude prices, reinforcing the idea that supply may outpace demand in the near term. At the same time, the drone strikes introduce a layer of uncertainty, as any sustained disruption to Russian infrastructure could tighten supply unexpectedly. This push and pull between easing sanctions and rising conflict risk is keeping volatility in check for now, but it’s also contributing to a cautious tone among investors who are wary of sudden shifts in the geopolitical landscape.
Markets are reacting accordingly. Asian equities fell overnight. European markets are following lower. U.S. futures are down, led by continued weakness in technology after the sector sold off to start the week yesterday. Oil is holding in the mid-$70s as supply concerns ease. Bonds are gaining as investors seek safety. The overall tone remains cautious as Tuesday trading gets underway.