Conflict Between Israel and Iran Elevates Oil Prices, Boosting Petroleum Companies in Stock Market
Last week, stocks of petroleum companies listed on the Bolsa experienced a significant uplift in their market value due to the rise in international oil prices following military clashes in the Middle East, particularly influenced by the escalating tensions between Israel and Iran.
Key Players in the Petroleum Sector
- Equinor: The Norwegian petroleum company saw a substantial increase of 13.17%, rising to 273.30 Norwegian krone.
- ConocoPhillips: This US-based company, involved in oil and natural gas exploration and production, experienced a 11.17% increase, reaching 96.96 dollars per unit.
- Petrobras: The Brazilian energy firm saw a 10.80% rise, trading at 34.98 Brazilian real.
- Petrochina: The Chinese oil and gas company increased by 8.19%, selling at 7.40 Hong Kong dollars.
- Ecopetrol: The Colombian petroleum company improved by 7.59%, trading at 1,985 Colombian pesos.
- Exxon Mobil: The American oil and gas producer saw a 7.53% increase, reaching 112.12 dollars per unit.
Impact of Israel-Iran Conflict on Oil Prices
The Israeli attack on Iran has pushed oil prices upward, as the Middle East accounts for roughly one-third of global crude oil production. A larger conflict could potentially restrict this supply, thereby increasing prices.
Analysts from Banorte highlighted that the week was marked by heightened risk aversion due to intensified geopolitical tensions in the Middle East. They noted that “the Israeli attack on Iran (and its response) increased concerns about a broader escalation into war.”
Barclays analysts pointed out that reports of Israeli attacks on Iran’s nuclear and ballistic missile infrastructure have alarmed the oil markets. Despite a roughly 10-dollar per barrel increase in prices over the past few days, Barclays believes that “the worst-case scenario is still far from being reflected in the price.”
Gabriela Siller, director of Analysis at Banco Base, suggested that there could be increased maritime risks in the Persian Gulf, the Gulf of Oman, and the Strait of Hormuz. Approximately 20 million barrels of oil pass through the Strait of Hormuz, accounting for nearly 20% of global oil supply.
Oil Price Increase
Last week, oil prices surged more than 10%, marking their largest weekly increase since July 2022. This rise was attributed to heightened risk aversion due to escalating geopolitical tensions in the Middle East, a critical region for crude oil production.
The ongoing uncertainty in the Middle East, coupled with the trade war between Donald Trump and China, has added volatility to crude oil prices. The futures for Brent crude rose 7.02% to reach 74.23 dollars per barrel on Friday, having soared over 13% to hit an intraday high of 78.50 dollars.
West Texas Intermediate (WTI) crude in the US advanced 7.26% to 72.98 dollars, following a 14% gain that took it to 77.62 dollars on Friday. The Mexican export crude mix climbed 7.52% to trade at 67.94 dollars per barrel.
Compared to the previous week, Brent increased by 11.67%, while WTI rose by 13.01%. Both recorded their largest weekly gains since October 7, 2022, with Brent gaining 16.54% and WTI rising by 15.05%. The Mexican export crude mix saw a more pronounced 13.20% increase, its largest weekly gain since the week ending March 4, 2022, when it surged by 23.88%.
Despite these gains, WTI is projected to rise by 3.99% in 2025, while the Mexican export mix is expected to increase by 2.57%. Brent, however, is forecasted to decline by 0.55%.
Market Response to Geopolitical Tensions
According to experts at CIBanco, market operators sought safer assets amidst the geopolitical tensions in the Middle East and the general strengthening of the US dollar. Fears that the Israel-Iran conflict could escalate further prompted markets to take positions in assets deemed as ‘safe havens’ and those correlated with energy.
The safe-value assets and energy-correlated assets benefited from this market behavior. Meanwhile, the US dollar regained ground, indicating that the recent decline might be temporary rather than structural, according to experts.
Gold rebounded 3.49% to reach 1,451.09 US dollars per ounce, hitting record levels during the past week due to heightened risk aversion.
Key Questions and Answers
- Q: Which petroleum companies’ stocks were most affected by the oil price surge? A: Equinor, ConocoPhillips, Petrobras, Petrochina, Ecopetrol, and Exxon Mobil all experienced significant stock price increases.
- Q: How did the Israel-Iran conflict influence oil prices? A: The conflict heightened geopolitical tensions in the Middle East, a key oil-producing region. This uncertainty and potential supply restrictions pushed oil prices upward.
- Q: What are the projected price changes for WTI, Mexican export crude mix, and Brent in 2025? A: WTI is expected to rise by 3.99%, the Mexican export mix by 2.57%, while Brent is forecasted to decline by 0.55%.
