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Oil Settles Nearly 20% Up On Output Cut Hopes, Geopolitical Tensions

Crude oil futures settled sharply higher on Thursday, extending gains from the previous session, as an escalation in tensions in the Middle East, and expectations of output cut by leading producers lifted the commodity.

Investors were also betting on more stimulus from central banks and governments across the globe.

Following Iran's Revolutionary Guard conducting a space launch that could advance its the country's long-range missile program, U.S. President Donald Trump threatened to engage Iranian gunboats that "harassed" U.S. nave vessels in the Strait of Hormuz.

West Texas Intermediate Crude oil futures for June ended up $2.72, or nearly 20%, at $16.50 a barrel.

The contract had tumbled to its close in 21 years on Tuesday.

Brent crude ended up $0.96, or 4.7%, at $21.33 a barrel today.

Major oil producers are reportedly considering output reduction. Saudi Arabia has already said that it is ready to take extra measures with other producers.

U.S. President Donald Trump is set to sign the bill providing a $484 billion package of new pandemic relief funds today. The bill was approved by the Senate earlier this week.

Trump said he will sign the bill and then begin discussions on additional legislation to provide fiscal relief for states and local governments, increase infrastructure spending, provide tax incentives for restaurants and entertainment businesses and cut payroll taxes.

Mexico said it will increase spending on social programs and infrastructure projects by $25.6bn, in a bid to jump-start the coronavirus-hit economy.

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