Oil prices surge as fears of a broader Middle East conflict grow. Iran launched ballistic missiles at Israel, raising concerns about supply disruptions. Brent futures rose 1.13%, while U.S. West Texas Intermediate crude climbed 1.26%. Therefore, the energy market faces growing uncertainty.
The conflict involves Iran, a key OPEC member with influence on global oil output. In response, Iran retaliated against Israel due to its campaign against Hezbollah in Lebanon. This, in turn, raises fears of supply disruptions. Iran’s role as a major producer makes any supply cuts significant. For instance, in August, Iran’s oil output reached a six-year high of 3.7 million barrels per day.
ANZ Research noted that Iran’s involvement raises the risk of oil supply disruptions. Additionally, analysts are closely monitoring the situation. Moreover, some fear the conflict could widen and disrupt exports further.
Israeli Prime Minister Benjamin Netanyahu vowed Iran would face consequences for its attack. Meanwhile, Tehran warned that retaliation would bring “vast destruction.” Thus, this increases fears of a wider conflict. Iran’s role in the global oil market is critical, especially if the U.S. becomes involved.
President Joe Biden expressed full U.S. support for Israel. At the same time, the U.N. Security Council will meet to discuss the violence, but resolution seems uncertain. Iran accounts for 4% of global oil production. Hence, supply disruptions could have a big impact. As a result, some analysts question whether Saudi Arabia might boost production to stabilize the market.
OPEC+ members meet this week to review the oil market. However, no policy changes are expected. Nevertheless, signs of increased production may help ease supply concerns. If the situation worsens, oil prices surge may continue, further shaking the market.
U.S. stockpile data shows mixed results. Crude oil and distillate inventories fell, while gasoline stocks rose slightly. Consequently, this has added to market volatility as traders assess the situation.
As tensions rise, uncertainty in the oil market grows. Ultimately, Iran’s involvement and the risk of a broader crisis could lead to more volatility in the weeks ahead.
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