In a recent news, the oil prices have seen an unprecedented increase in their prices as conflict in the Middle East escalates. The latest retaliation attack of Iran on Israel last night has caused an increase in the prices of oil by over one dollar. As per Reuters, “Brent futures leapt $1.08, or 1.47%, to $74.64 a barrel, while U.S. West Texas Intermediate (WTI) crude spiked $1.12, or 1.6%, to $70.95 at 0650 GMT. During trading on Tuesday, both crude benchmarks surged more than 5%.”
However, it is pertinent to mention here that Iran is a major producer of crude oil in the global market. As per US Energy Information Administration, Iran is the 9th largest producer of crude oil in the world that makes up about 4% world oil production. On the other hand, both Gaza and Israel do not have much capacity to produce oil at large scale. Now, it depends on the response of Israel that will determine the future oil prices in the global market.
Iran has launched over 100 ballistic missiles into Israel, with more expected. Global markets are watching closely, as any disruption to Iran’s oil industry could send prices soaring. Brent crude is already up over 3.5%,. #MiddleEast #OilPrices #Geopolitics…
— OilPrice.com (@OilandEnergy) October 1, 2024
It should be noted that the oil prices throughout the world have increased during Iranian revolution in the 1950s and as well as the Iran-Iraq war in the 1980s. therefore, Iran plays a vital role in determining the global oil prices in the market. Priyanka Sachdeva, senior market analyst at Phillip Nova, stated, “Still, the scale quickly turned towards fears of oil supply disruptions in the Middle East after Iran fired ballistic missiles at Israel.”
Seeing the escalating tensions in the region, the United Nations Security Council on Wednesday scheduled an urgent meeting about discussing the situation of Middle East. At the same time, the European Union has also called the need for an immediate ceasefire between the countries before the situation goes out of control.
🚨 The Israel-Hezbollah conflict poses significant risks for oil prices. Historical precedents suggest that increased tensions could lead to supply disruptions, potentially pushing prices up by 3-75%.https://t.co/SKfPHg3DM0
— OilPrice.com (@OilandEnergy) September 30, 2024
The Capital Economists stated, “A major escalation by Iran risks bringing the U.S. into the war. Iran accounts for about 4% of global oil output, but an important consideration will be whether Saudi Arabia increases production if Iranian supplies were disrupted.” They further said, “Any suggestion that production hikes will proceed could offset concerns of supply disruptions in the Middle East.”
