US crude oil rallies more than 4%, tops $80 as Pentagon sends more forces to Middle East

US crude oil rallies Monday to top $80 per barrel as the Pentagon dispatched more forces to the Middle East in anticipation of an Iranian attack on Israel.

Defense Secretary Lloyd Austin ordered a carrier strike group, including F-35 warplanes, to accelerate its deployment to the region. Austin also ordered a guided-missile submarine to the Middle East.

Israel has put its military on high alert, a person familiar with the matter told The Wall Street Journal.

“We see allocations to oil and gold as the main means to add some protection to portfolios. It is  against a further escalation in geopolitical tensions,” UBS analysts told clients in a Monday research note.

U.S. crude oil is trading higher even as OPEC lowered its global demand growth forecast by 135,000 barrels per day.  This is citing softening consumption in China.

“The oil markets reacted strongly to the increased geopolitical risk even as OPEC has shown some concern about its demand growth”. This is what Phil Flynn said. Hi is the senior market analyst at the Price Futures Group. He said the market is still on track for a deficit as inventories fall.

U.S. crude oil finished last week more than 4% higher, snapping a 4-week decline, as the stock market recovered most of its losses from a flash sell-off caused by mounting fear of a recession and after the Bank of Japan lifted interest rates a fraction.

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Source: CNBC

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