Barclays: Rising Geopolitical Tensions Key Theme In Commodity Markets

The biggest commodity-market theme presently appears to be rising geopolitical tensions and their effect boosting oil prices as Iranian sanctions tighten the global oil market, says Barclays Capital. “At present, there seems little likelihood of easing tensions with Iran, which itself has a strong incentive to do whatever it can to ratchet oil prices higher--to offset the decline in its own revenues and simultaneously weaken the economies of its main Western opponents,” the bank says. “Consequently, we are raising our exposure to the energy sector, reducing it to base metals, are at market weight in precious metals and have a small underweight in agricultural commodities.” By market, Barclays says its main “overweight” positions this month are in Brent crude and gasoline, while it has smaller “overweights” in copper, West Texas Intermediate crude, corn, soybeans and gold. “Our largest underweights are in U.S. natural gas, nickel, zinc, aluminum, coffee and sugar.”


Source:Kitco