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Analysts predict a spike in oil prices at the start of the trading week following Iran’s drone and missile attack on Israel late Saturday.
This significant escalation, in retaliation for what Iran suspected was an Israeli assault on Iran’s consulate in Syria, raises concerns of a wider regional conflict impacting global oil markets, reported Reuters.
Brent crude prices had surged to $92.18 a barrel on Friday, the highest since October, before settling at $90.45. U.S. West Texas Intermediate futures closed at $85.66. There is no trading on Sundays.
According to Tamas Varga from oil broker PVM, although there has been no immediate impact on oil production and Iran has suggested that the issue “can be deemed concluded,” he said “it is only reasonable to expect stronger prices when trading resumes.”
“However fierce and painful the initial market reaction will be, the rally could prove to be short-lived unless supply from the region is materially disrupted,” he added.
Also Read: Iran’s Revenge Promise Against Israel Is Taking Down Its Stock Market — But Large Tech Companies Appear Immune
In response to the attack, President Joe Biden announced an upcoming meeting of the Group of Seven (G7) nations to discuss a coordinated diplomatic approach.
Analysts, including UBS’s Giovanni Staunovo, highlighted that the duration of any price increases depends on Israel’s counteractions and whether the G7 nations will “target or not Iranian crude exports.”
Iran has significantly boosted oil exports under the Biden administration, a point of contention given the impending U.S. presidential elections.
Reducing Iranian exports could lead to higher oil prices and gasoline costs in the U.S., presenting a key issue in the election narrative.
The security of the Strait of Hormuz, a critical maritime passageway for global oil, also remains a focal point, with recent threats from Iran to close it if necessary.
Now Read: US Warns Of Impending Iranian Strikes On Israeli Targets: Oil Rallies, Deutsche Lufthansa Stops Flights To And From Iran
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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