Oil rises on expected US ban, gold rises

Oil higher as the US prepares Russian import ban

There’s a lot going on in the oil market at the minute which is contributing to the huge amount of volatility and uncertainty we’re seeing. It’s such a headline-driven market at the moment and today is certainly no different. US President Joe Biden is reportedly preparing to announce a unilateral ban on imports of Russian oil, LNG, and coal as part of the latest actions to hold the country accountable for its invasion of Ukraine.

The “unilateral” aspect of that is the most important as far as markets are concerned which is why oil prices are only 5-6% higher today, rather than 15-20%. Still, it’s a bold move from the US, even if Russian imports make up a relatively small number. It’s another step towards the West turning its back on Russia and leaving it isolated in the world. Europe’s move will be slower but the debt raising is a big first step towards something similar.

At the same time, the IEA has warned the 60 million barrel coordinated reserve release last week was just an initial response and represented just 4% of IEA member stores. The group is expected to go further in order to bring down the price and we can only hope that future efforts will be more successful.

Of course, against the backdrop of war in Ukraine and severe sanctions against Russia, that’s easier said than done. There was a not-so-subtle dig at Saudi Arabia and UAE in there as well, both of whom have refused to use spare capacity to ease supply issues and instead stuck with their fellow OPEC+ partners.

Rarely been a stronger bull case for gold as it approaches all-time highs

We may be seeing a temporary rebound in risk appetite today but that’s not weighing on demand for gold, as commodity prices continue to spur fears of soaring inflation and recessions. The yellow metal has stormed above USD 2,000 to trade up around 2% on the day and it’s not looking like slowing down.

Record highs are not that far away and it’s hard to imagine a scenario in which demand doesn’t remain strong. We’re seeing such significant amounts of volatility and uncertainty at the moment that there’s rarely been a stronger bull case for a traditional safe haven like gold.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.