Crude oil faced a price increase on Monday, while gold prices trended downward. Global markets have divided into two different fronts, especially ahead of the Federal Reserve's decision on interest rates on Wednesday.
Details of Crude Oil Prices
Brent oil rose by 2.75% to $107.48, and West Texas Intermediate (WTI) also increased by 2.51% to $102.56. This price increase has occurred while the prices of assets such as gold, silver, and copper have all decreased.
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Regional Developments and Their Impacts
Saudi Arabia halted its east-to-west pipeline operations late last week. This pipeline allowed Saudi Arabia to export its oil without passing through the Strait of Hormuz. According to existing reports, this disruption could threaten the supply equivalent to 4% of the world's oil.
Additionally, the Houthis from Yemen have reached the island of Perim and strengthened their control over Bab-el-Mandeb. This maritime route accounts for about 4 to 5% of global oil supply. Oil prices increased by 8% over the week and crossed the $100 mark for the first time since July.
Market Predictions and Monetary Policies
Tony Sycamore, a market analyst at IG, warned about the future of oil prices, stating that if negotiations this week in Oman do not lead to an operational agreement, there is a risk that crude oil will continue to rise towards the $119.48 ceiling from early March.
U.S. inflation data, which was higher than expected, increased the likelihood of continued "tight monetary policy." Traders are now pricing an 86.3% chance of an increase in the target interest rate to the range of 3.75% to 4%, while this probability was 59.4% a week ago and 33.9% a month ago.
The crypto market has also been affected by these developments. The total market value of cryptocurrencies decreased by 4.32% in 24 hours, reaching $2.62 trillion. However, after this decline, it recovered to $2.65 trillion. The price of Bitcoin, after a weekly drop of 4.4%, is now trading around $77,750.
Metals also failed to provide a safe haven for investors. The price of gold decreased by 1.22% to $4,296. Oil is now more influenced by supply-related news, while crypto and metals are affected by the Federal Reserve's decisions.
The decision on Wednesday will determine whether these two different drivers continue to keep the markets apart.
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