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Oil prices will likely rise on Monday in response to Iran's attack on Israel this weekend, analysts said.
Further price movements may depend on how Israel and the West respond to the attack. Iran launched one more barrage on Saturday more than 300 drones and missiles, most of which were intercepted by Israeli air defenses. It marked the first direct attack from Iranian territory after years of proxy war.
“Oil prices could soar at the opening, as it is the first time Iran attacks Israel from its territory,” Giovanni Staunovo, an analyst at UBS Group, said in a report. “The duration of the rebound will also depend on the Israeli response.”
US President Joe Biden, who faces a possible backlash from voters if gas prices rise during an election year, said he called a meeting among the leaders of the Group of Seven major economies on Sunday to form a diplomatic response. to the Iranian attack. Iran, which pumps more than 3 million barrels of oil a day, is OPEC's third-largest oil producer after Saudi Arabia and Iraq.
Growing concerns that Iran would stage an attack in response to an attack on its embassy compound in Damascus last week helped prop up oil prices. Global benchmark Brent crude oil (CO1:COM) hit $92.18 a barrel on Friday, the highest level since October, and closed at $90.45 a barrel. US West Texas Intermediate crude oil futures (CL1:COM) rose $0.64 a barrel to $85.66 a barrel.
Maritime traffic
Energy traders will likely examine oil tanker traffic through the Strait of Hormuz, through which about a fifth of the world's oil supply passes. Any attack on oil tankers can cause increases in oil prices.
“The rise in oil prices has been largely driven by the geopolitical risk premium in the Middle East, which is likely to persist for longer,” Citigroup analyst Eric Lee said in an April 11 report.
A sustained rise in prices “could in turn drive political reaction functions that limit the benefits of slowing strategic crude purchases by the United States and China for OPEC+ to recover oil in the third quarter of 2024,” he said. Read the report.
