The sudden collapse of Silicon Valley Bank has sent shockwaves through the entire financial sector and marked the biggest bank failure since the 2008 financial crisis. Being the only publicly traded bank focused on Silicon Valley and startups for four decades, the swift collapse has particularly rattled the venture capital community and left climate tech startups in a crisis.
But the energy markets have not been spared, with oil prices crashing to multi-year lows following the ensuing banking crisis. Oil prices crashed spectacularly, with WTI crude falling from $80.46 per barrel just 10 days prior to the $67 range, while Brent declined from $86.18 per barrel to the $73 range, levels they last touched in December 2021. Commodity analysts at Standard Chartered warned that the oil price crash had been exacerbated by hedging activity–specifically, due to gamma hedging effects, with banks selling oil to manage their side of options as prices fell through the strike prices of oil producers put options and volatility increases. The negative price effect has been exacerbated because the main cliff-face of producer puts currently occupies a narrow price range.
Source : Banking crisis prompts investors to shift from oil to gold