Oil prices fly to the international market

This is the direct consequence of Israeli strikes against military and nuclear installations in Iran overnight Thursday to Friday, the reaction was immediate.

The barrel WTI (the reference of the price of oil in the United States) is 75 dollars, that of Brent from the North Sea (the reference in Europe) is $ 76. Oil prices soar more than 10% on Friday June 13 after the Israeli strikes against military and nuclear installations in Iran. A natural reaction because Iran is one of the ten largest oil producers in the world and the market has already been very tense for several days. Everyone saw geopolitical tensions up between Iran and, not Israel, but the United States.

Iran finds itself at the heart of strategic issues on two levels: Israel on the one hand, the United States on the other on the nuclear issue. For the oil market, in the event of climbing, absolute fear would be a closure of the Strait of Ormuz. If Iran blocks this very narrow passage, this could affect up to 20% of oil deliveries worldwide. In any case, it is still too early to say what impact this situation will really have on fuel prices at the pump.

The situation is to be followed very closely, especially since this outbreak of oil prices combines with a strong withdrawal of the dollar. It is practically the same causes and the same effects, even if geopolitical tensions are not the main cause of the withdraw of the greenback. Parity reached $ 1.16 for 1 euro. A floor never seen since October 2021. Overall, the dollar is lower compared to almost all of the G10 currencies, the ten richest countries on the planet.

Donald Trump has just breathed hot and cold on his trade policy in the space of two days. On Wednesday, the American president announced that an agreement is reached during negotiations in London between Washington and Beijing, China agreeing to facilitate exports to the United States of rare land necessary to make semiconductors whose industry is in need. The next day, Thursday, the same Donald Trump announces that he is preparing to impose customs duties unilaterally on certain business partners when he had decided a break until July 9. No one understands anything left there and the dollar becomes the collateral victim.

Another real subject: the drop in the dollar strengthens the euro. However, with a euro superior to the dollar, we sell European products more expensive abroad. Our companies are therefore penalized compared to American companies which export less with a lower dollar. But the back of the medal is more complicated for Washington: the dollar is assigned by the budgetary law of Donald Trump which provides for massive tax cuts and heavy expenses in the defense. This makes fear of an increase in the American budget deficit which is already very heavy. All this creates instability and uncertainties on the evolution of the global economy … Knowing that the dollar remains the most used currency in the world.