U.S. oil prices reached a three-month high on Monday following a drone strike on a U.S. base at the Jordan-Syria border, allegedly carried out by an Iran-backed militia. The incident led to the death of U.S. service members. Concurrently, Exxon Mobil (XOM) and Chevron (CVX) were gearing up for their Q4 2023 earnings reports, influencing market dynamics.
West Texas Intermediate (WTI) oil prices, after a 6% surge last week, fell below $78 per barrel on Monday. Brent crude, the global benchmark, also reached a three-month high but traded below $82 per barrel. The situation in the Middle East, particularly the U.S. response to the drone attack, kept investors vigilant.
The White House attributed the drone attack to Iran-backed militants, prompting discussions on potential U.S. reactions. Republican politicians advocated for military action against Iran, raising concerns in oil markets about the revival of sanctions on Iranian oil exports. Current estimates project Iranian exports between 1 million and almost 2 million barrels per day.
Despite the geopolitical tensions, WTI prices remained around $78, a notable increase from below $70 in early December. This surge was attributed to factors like U.S. demand recovery and concerns about potential disruptions in Iranian oil exports, crucial for the international oil market. Analysts suggested that the removal of Iran’s exports could result in an approximate $10 increase in oil prices.
The rise in oil prices coincided with the upcoming Q4 earnings reports of Exxon Mobil and Chevron. Exxon Mobil’s stock showed a 0.17% gain, while Chevron experienced a slight drop during Monday’s market activity. Chevron shares had gained 4.9% to reach 149.14 the previous week, while Exxon Mobil saw a more than 6% increase to reach 103. Exxon Mobil’s stock performance indicated a 3% rise in January, while Chevron’s stock slightly decreased during the same period. The market remained attentive to both geopolitical developments and the financial outcomes of major oil corporations.