Deutsche Bank strategists highlight a sharp rebound in Brent Oil as US–Iran tensions escalate, with Brent posting its biggest weekly gain since April and extending gains this morning. They link higher Oil and European natural gas prices to renewed inflation concerns and notes that bond futures are weaker. They also flag a thematic piece on how higher Oil could trigger a broader risk selloff.

Geopolitical escalation lifts Brent sharply

"Recapping last week now, geopolitics remained top of the agenda for markets, with a sharp rise in oil prices as the strikes between the US and Iran showed no sign of easing. Indeed, Brent crude oil prices ended the week up +15.91% (+4.59% Friday) at $88.10/bbl, marking their biggest weekly jump since April."

"In response, this morning Brent is up +2.45% to $90.26/bbl after a ninth consecutive night of US strikes against Iran. Given the escalation US futures are performing relatively well with S&P (+0.15%) and Nasdaq (+0.47%) contracts higher."

"So that revived fears about a more persistent inflation shock, particularly with European natural gas prices also rising, and the front-end future rose +19.95% last week (+5.79% Friday) to its highest level since March at €58.01/MWh."

"Topical Deutsche Bank publications: * Commodities Outlook: Look on the bright side, July 15 * Thematic Research: What’s the pain threshold: when will higher oil prices drive a bigger selloff?, July 14."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)