Background on Key Figures and Relevance
The ongoing conflict between Israel and Iran has recently influenced global oil prices. The United States, under the leadership of former President Donald Trump, has been deliberating its involvement in the escalating tensions. This delay in decision-making has caused volatility in oil markets, with prices experiencing both declines and increases over the past week.
Oil Price Movements
Brent crude futures were down by 1.89 dollars, or 2.4%, to 76.96 dollars per barrel by 4:00 a.m. Mexico City time. However, they were still on track for a third consecutive weekly increase of nearly 4%. Meanwhile, the West Texas Intermediate (WTI) crude for July delivery rose 1.1% to 75.96 dollars, as the contract neared its expiration date without being settled due to a US holiday on Thursday.
The August contract also increased by approximately 0.4%, or 27 cents, to 73.77 dollars.
Recent Escalation and Market Reactions
On Thursday, oil prices surged nearly 3% following Israel’s airstrikes on Iranian nuclear sites and Iran’s retaliation with missiles and drones against Israeli targets. Neither side showed signs of de-escalating the one-week-old conflict.
However, after the White House announced that President Trump would decide on US involvement in the Israel-Iran conflict within the next two weeks, Brent prices trimmed their gains.
Expert Analysis and Potential Impacts
John Evans, an analyst at PVM, stated, “While Israel and Iran continue to strike each other, there’s always a risk of unintended consequences that could escalate the conflict and affect oil infrastructure.”
“The world has more than enough oil supply for the next five years,” Evans added, “but a nightmare scenario of 20 million barrels per day being blocked in the Arabian Sea, even for a short period, could disrupt global oil markets.”
Iran has previously threatened to close the Strait of Hormuz in retaliation against Western pressures. Any closure of the strait could restrict trade and impact global oil prices, as it is a crucial shipping route for oil.
To maintain crude supply amidst the attacks from Israel, Iran has been loading tankers one by one and moving floating oil storage closer to China, according to Reuters interviews with two ship-tracking companies. This strategy aims to sustain a vital income source while facing attacks.
Ashley Kelty, an analyst at Panmure Liberum, commented, “I believe the current risk premium is approaching 10 dollars per barrel for the Israel-Iran conflict, but I don’t foresee prices returning to 60 dollars in the short term.”
Should the conflict escalate to the point where Israel targets Iran’s export infrastructure or Iran disrupts maritime transport through the Strait of Hormuz, oil prices could indeed reach 100 dollars per barrel, Kelty concluded.
Key Questions and Answers
- Q: What is causing the fluctuation in oil prices?
A: The delay by the US in deciding whether to intervene in the conflict between Israel and Iran has led to market volatility, with prices experiencing both declines and increases.
- Q: Who are the key figures involved in this situation?
A: Former US President Donald Trump and the current geopolitical tensions between Israel and Iran are central to this situation.
- Q: How could the conflict impact global oil supply?
A: If the conflict escalates, there’s a risk of disruptions to oil infrastructure or maritime transport through the Strait of Hormuz, which could significantly impact global oil supply and prices.
- Q: What are experts saying about potential oil price increases?
A: Experts suggest that if the conflict leads to serious disruptions in oil supply, prices could rise to 100 dollars per barrel.
