Oil price returns to fundamentals

Overshadowed by geopolitics but finally overtaken by weak fundamentals, it has been a week of turmoil in the global oil markets. After a soft beginning to the week with oil prices edging lower, prices spiked by almost four per cent in the immediate aftermath of the killing of Hamas leader Ismail Haniyeh in Tehran on Wednesday. This coupled with the killing of a senior Hezbollah commander in Beirut a day earlier, escalated tensions in the Middle East, raising concerns about potential supply disruptions from the oil-rich region. Haniyeh was assassinated in Iran’s capital after he attended the inauguration of the new Iranian president. Although Israel has not officially conceded to the killing of Haniyeh, Iranian officials and Hamas have blamed Israel for the strike that killed him.