Oil rates increase on Middle East supply concerns
Date
10/6/2024 8:20:22 AM
(MENAFN) Global oil prices experienced a significant uptick on Friday, fueled by concerns over potential disruptions to supply stemming from escalating conflicts in the Middle East. Following Israel's recent invasion of Lebanon and Iran's missile attacks on Israel, energy markets have reacted with increased volatility.
As of 10:43 GMT, the brent crude benchmark saw a rise of 1.8 percent, reaching USD79 per barrel—its highest price since August 30. Similarly, West Texas Intermediate (WTI) crude climbed 1.3 percent, trading at USD75 per barrel. These price fluctuations underscore market anxieties about the stability of crude oil flows from the Middle East due to the ongoing hostilities.
The situation intensified on Thursday when oil prices surged by 5 percent after Israeli officials issued threats to strike Iranian oil facilities in retaliation for Tehran's recent missile bombardment of Israel. This move heightened fears of a significant drop in oil production, particularly if Iranian exports were to be affected.
Goldman Sachs analyst Daan Struyven indicated to CNBC that if Iranian production were to decline by at least one million barrels per day as a result of such actions, oil prices could potentially spike by as much as USD20 per barrel. Bjarne Schieldrop, chief commodities analyst at Swedish banking group SEB, took it a step further, warning that if Iran's energy infrastructure were severely damaged, oil prices could soar beyond USD200 per barrel.
The backdrop to these price movements includes a series of escalatory actions in the region. Earlier this week, Iran’s Islamic Revolutionary Guard Corps (IRGC) launched approximately 200 missiles at Israel, framing the strikes as a retaliation for the ongoing bombardment of Gaza and Lebanon, as well as the recent targeted killings of senior Hamas and Hezbollah leaders by the Israel Defense Forces (IDF).
In response to the heightened tensions, the IDF has initiated ground operations against Hezbollah in southern Lebanon, with military officials stating that these actions, in conjunction with extensive airstrikes, are aimed at curtailing cross-border rocket and mortar attacks by the militant group.
As the situation continues to develop, market participants will be closely monitoring events in the region, with the potential for further fluctuations in oil prices as geopolitical risks evolve.
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