Oil Prices Surge Amid Reports of Israeli Strike on Iran
Oil prices soared on Friday following reports of a significant escalation in tensions between Israel and Iran, raising concerns about potential disruptions to oil supplies from the Middle East.
Benchmark contracts experienced a sharp increase of over $3 before slightly retracting. As of 0615 GMT, Brent futures surged by $1.40, marking a 1.61% rise to reach $88.51 per barrel. Similarly, the most active U.S. West Texas Intermediate contract climbed $1.38, or 1.68%, reaching $83.48 per barrel.
According to sources cited by Reuters, Israel carried out an attack on Iranian soil, intensifying the ongoing exchange of hostilities between the two nations. While Iranian media reported explosions, an Iranian official attributed them to the country’s air defense systems. Additionally, Iranian state media reported the downing of three drones over the central city of Isfahan.
“Rising geopolitical risk premiums translate to a risk-off environment at this juncture with a heightened risk of oil supply disruption at least in the short-term,” stated Kelvin Wong, an analyst at OANDA in Singapore.
Jun Rong Yeap, a market strategist at IG in Singapore, warned that further escalation could prolong the tit-for-tat retaliation, potentially escalating the conflict to a regional level and jeopardizing oil supplies. “Prices of oil could stay supported in the meantime as tensions will continue to heat up,” Yeap emphasized.
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The recent escalation follows Iran’s retaliatory strike over the weekend, where hundreds of drones and missiles were launched following a suspected Israeli attack on its embassy compound in Syria. Despite minimal damage and casualties, the incident heightened concerns about a widening conflict in the region.
Investors had been closely monitoring Israel’s response to the April 13 Iranian drone attacks, with the geopolitical risk premium in oil prices previously unwinding on the expectation of moderated Israeli retaliation due to international pressure.
Meanwhile, in the backdrop of these developments, Venezuela lost a crucial U.S. license allowing the OPEC member to export oil globally. Additionally, the U.S. imposed sanctions on Iran, targeting its unmanned aerial vehicle following the drone strike on Israel, although excluding its oil industry
