Oil Prices Surge Amid Middle East Tensions

Let's get to the big story breakdown on this Monday morning.

US stock futures are looking at a higher open, but the markets sold off on Friday because of escalating tensions between Israel and Iran.

Now stocks and crypto dropped, but commodities like gold and oil spiked at the end of last week.

Now investors are still looking for an official trade deal from the US and China.

Relations.

Between them seem to be much better at the moment, and Trump and China's president are reviewing a trade framework and the G7 well underway in Canada.

Trump arrived last night and the US working through trade tensions over tariffs with the country leaders in attendance.

Now Trump will also meet with Ukrainian President Zelensky to discuss the war with Russia.

Well joining me.

As we kick off a new trading week is Patrick L.

Young, chairman and founder of Exchange Invest.

So Patrick, good morning.

Thank you so much for joining us.

So first and foremost, we are looking at futures higher on this Monday morning, but we have to keep in mind that there could be a little bit of complacency here in the market.

So what is your reaction to the conflict taking place in the Middle East?

Well, all of a sudden, Remy, good morning everybody.

We have a complete 180 degree rotation.

You talk about the fact that Mr.

President Zelinsky is going to be meeting President Trump during the course of this week.

Doesn't he suddenly seem rather irrelevant to the geopolitical future of the world?

What we saw on Friday, for example, 9.5 million contracts, I think, were traded of oil and energy futures out of the Intercontinental exchanges massive energy complex alone.

Of course, the parent company of the New York Stock Exchange. was a demonstration of how important this area truly is and how third order actually the Ukrainian war suddenly becomes.

So what we're seeing this week is a complete reordering of the global priorities and of the market's priorities, because suddenly markets have learned something again.

What they've really got to worry about is not the idea there are going to be Russian tanks in Prada in Milan by Thursday afternoon.

It's the idea that the Middle East could blow up and we'll end up with $100 barrel oil again.

Fortunately, over the weekend, it looks as if Frank really is winning.

Sorry.

Yeah, and Patrick, now you mentioned what we saw in terms of oil prices and as you mentioned both in WTI as well as Brand Futures, we saw quite the rally at the end of last weekend.

Those prices do remain elevated on this Monday morning.

So tell us your assessment of risk when it comes to the Strait of Hormuz and what this can mean for oil prices.

Well, first of all, let's look at it from a domestic standpoint.

Oil prices went up last week roughly about 8 or 9%.

Sooner or later, that's going to end up at the pumps.

We're in the early stages of driving season in the USA.

That's not good for consumers.

For all those who are in Europe and the rest of the world, they're all going to be impacted by that oil increase at exactly the moment in time when lots of people are trying to keep a cap on inflation and therefore managing to keep.

Interest rates coming down.

Now what does this mean for the Straits of Hormuz?

Obviously it's going to be incredibly edgy for the time being because people are going to be very concerned, particularly if the proxies through Houthi, the Houthi rebels that are coming out of coming out of various parts of the of the area are going to be attacking shipping as they come through.

The truth of the matter is though, it may Be that we're reaching closer to a point of stability.

We don't see anybody coming in to try and support Iran so far.

We actually see Iranian defenses have been incredibly degraded by the Israelis over 4 or 5 days.

Their air defenses seem to be null, so they may not be in a position to come back and attack in the short term.

To that end, the most interesting conversation may if MBS Mohammed bin Saium is turning up at the G7 this week, what he says to Trump behind the scenes could be very, very instructive because Saudi Arabia now is a huge swing state in the Middle East and that has a monster impact on the potential for oil.

I personally I am somewhat optimistic.

We're going to see a lot of volatility, but we're going to come through this intact.

Yeah, and Patrick, you just mentioned several leaders who are not part of the G7, but they are looking for face time with Trump as well as other countries during this gathering taking place in Canada and of course we can't forget the fact that the Federal Reserve kicks off its two-day meeting tomorrow.

With the rate decision coming out on Wednesday, so the focus should be on central banks, but given everything that's happening around the globe, geopolitics do seem to be taking center stage.

So given everything that's happening, do you expect to hear anything out from the G7 regarding trade and tariffs?

I think it's very difficult for the G7 right now because we've almost forgotten all about what's been going on with trade and tariffs over the course of the last 3 months and truly the members of the G7 have never looked less relevant to the world unfortunately, arguably apart from Japan.

But if you look at France, Italy, the UK, they're all really going to be just puppet states of what the US decides to do, whether they like it or not.

I mean, look at what happened at the weekend.

President Macron went on a historic visit to.

Greenland.

Does anybody know?

Did anybody notice?

I doubt it unless you were reading the French press.

So the simple fact is the people who are most important at the G7 are either not members of the G7, Prime Minister Modi of India, who's actually there as much because he's trying to solve some political local issues in Canada.

Remember Tip O'Neill's great Maxim.

All politics are local.

Mark Carney in his honeymoon period is trying to make this the best possible showcase for Canada. up in the Rockies and at the same time, the two people who are not there are President Xi of China and indeed Vladimir Putin.

They are both very, very pivotal important people.

And let us not forget on one final point, the man who in many ways had the most interesting weekend is Vladimir Putin because he's the only major world leader who spoke to both the president of Iran and the Prime Minister of Israel and has essentially Cordial relations with both, so he's weighing up how can he become the swing state player to help the United States of America, which advances its aims in Ukraine, which leaves her President Zelinsky with a lot of European Union shoulders to cry on in Canada as a European proxy, but ultimately he is exposed at the moment in terms of what's happening at the macro level of geopolitics and the first order concerns of the USA.

OK, Patrick, well, we will have to leave it there for this Monday morning, but thank you so much for joining us.

We'll see what comes out of the Fed Reserve as well as the G7 meeting.