What recent events are affecting oil prices?
Public.com presents The Rundown, your daily market update in under 10 minutes. My name is Zaid Admani, and today is Friday, March 13th.
In today's episode, we'll tell you why Adobe CEO is stepping down after 18 years at the company. We'll also tell you about Tesla's comeback in China. Then stick around to the end of the show to learn a shocking stat about the profitability of baseball teams. We got a great show for you today. Let's go. Well, markets had a rough day yesterday.
The S&P 500 fell by 1.5% on Thursday, while the NASDAQ did even worse, dropping by 1.8%. Energy was once again the best performing sector because right now it's all about oil prices. Oil shot up 9% yesterday to over $100 a barrel. It was the largest one-day spike for oil prices since the pandemic. So the situation in the Middle East isn't getting any better.
Iran said yesterday that it plans to keep the Strait of Hormuz closed, and there are reports now that Iran is even laying naval mines across the strait, which signals that there is no de-escalation in sight. So the strait remains closed, and that means that 20% of the world's oil supply is trapped and unable to get through.
The International Energy Agency is calling this the largest oil supply disruption in the history of the global oil market. Now, the U.S. and the IEA have tried to calm things down. Yesterday, the U.S. announced plans to release up to 172 million barrels from their strategic petroleum reserves as part of a broader IEA plan to release about 400 million barrels globally.
On top of that, the US government has even issued a waiver allowing some countries to buy sanctioned Russian oil to help offset the supply shock from the Hormuz closure. But none of that is really calming the oil markets much because at the end of the day, you can't replace 20 million barrels a day with reserves.
Now, one interesting thing to note here is that the oil market still seems to believe this disruption might be temporary. A quick explanation. When you hear oil prices quoted in articles or on this podcast or on TV, that usually refers to the front month futures contract. So when I say that oil is trading at $100 a barrel, I'm talking about the oil scheduled for delivery in April.
But if you look further out, the December WTI contract is trading closer to $75 a barrel. So the market seems to believe prices will eventually come down by the end of the year. Still, even short-term energy shocks can ripple through the economy, pushing up gas prices, transportation costs, and inflation more broadly.
So yeah, I think that oil prices are gonna continue to dominate the market conversation for a while. Now looking beyond oil, the crypto markets are seeing some signs of life. Bitcoin and Ethereum are both up 10% in the last week. Bitcoin is trading above $72,000, while Ethereum is back above $2,100. Gold, on the other hand, is still stuck at the $5,000 mark. Not much activity in gold right now.
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