Brent: Price spike still below stress threshold – Deutsche Bank

Deutsche Bank strategists highlight a sharp two-day rally in Brent Oil driven by geopolitical tensions and Gulf-related policy headlines. Despite the move, Brent remains well below levels that previously triggered notable stress in equities and credit, and they reiterate that past episodes suggest vulnerabilities only emerge once Brent trades sustainably around $110/bbl in today’s prices.

Oil rally but stress still limited

"Yet even as CPI surprised on the downside, oil prices continued to move higher, with Brent crude up another +1.72% yesterday to $84.73/bbl, taking its 2-day gain since the weekend to +11.47%."

"Nevertheless, that was actually well beneath the intraday peak above $87/bbl, with a big pullback after President Trump said that the proposal for a 20% fee in the Strait of Hormuz would be replaced by “Trade and Investment Deals that the various Gulf States will be making into the United States.”"

"But for the most part, there were signs that investors were still looking through the latest oil price spike."

"Brent is well below its peak from earlier in the year, having spent around two months above $100/bbl."

"And as Henry pointed out yesterday, earlier in the year it took Brent at $110/bbl before we saw meaningful vulnerabilities for equities and credit."