Global Oil Prices Likely To Rise Due To The Iran-Israel Conflict

(CTN News) – A significant increase in oil prices is expected to follow Iran’s recent attack on Israel, according to analysts.

Following fears of an Israeli assault on Iran’s consulate in Syria earlier in April, the weekend attack directly targeted Israeli territory, elevating tensions in the region.

In the last week, oil prices rose due to anticipation of Iran’s potential retaliation, driving the global benchmark Brent crude to $92.18 a barrel, its highest level since October.

The price of Brent crude settled at $90.45, while the price of the West Texas Intermediate crude futures increased by 64 cents to $85.66. While the markets are closed on Sunday, experts expect a substantial increase when they reopen on Monday.

The Oil Prices broker PVM’s Tamas Varga commented, “It is only reasonable to expect higher prices when trading summaries,” pointing out that there have been no disruptions in production to date, and Iran indicated that the situation may be considered resolved.

In spite of this, there is a possibility that regional supply chains will be disrupted, which may jeopardize the sustainability of this price rally.

Following the attack, Vice President Biden plans to convene a meeting with leaders of the Group of Seven major economies to coordinate diplomatic responses.

There are analysts, such as Giovanni Staunovo from UBS, who anticipate a spike in oil prices at the market’s opening, emphasizing the significance of Israel’s response and the outcome of the G7 meeting, in particular regarding the implementation of sanctions on Iranian crude exports.

The Biden administration has significantly increased Iran’s oil exports in contrast to the reduced exports during the Trump administration. In its response, Biden’s team asserts that it is not encouraging Iranian export expansion, but rather enforcing sanctions.

In light of the upcoming elections, a decrease in Iranian exports may have a significant impact on U.S. gasoline prices as well as increase oil prices.

Additionally, attention is drawn to possible implications for shipping via the Strait of Hormuz, which is an important route for the transportation of crude oil around the world. It has previously been suggested that Iran might close the Strait if necessary, underscoring the importance of regional developments.

“Crude Oil Prices already include a risk premium, and the extent to which it will expand further almost entirely depends on developments near Iran around the Strait of Hormuz,” noted Ole Hansen of Saxo Bank. Accordingly, ongoing geopolitical events may dictate the trajectory of oil markets in the near future.

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