U.S. crude oil prices rose about 5% on Thursday, rising for a third straight session, on concerns that Israel could attack Iran’s oil industry in retaliation for Tehran’s ballistic missile attacks this week.
President Joe Biden was asked by reporters Thursday morning whether the United States would support an Israeli attack on Iranian oil facilities. “We’re talking about it. Regardless, I think it’s going to be a little bit,” Biden said. “Nothing’s going to happen today,” the president added.
CNBC has reached out to the White House for comment.
Daniel Galli, senior commodities strategist at TD Securities, said Biden’s comments were a catalyst for higher prices. “Geopolitical risks in the Middle East are probably at their highest level since the Gulf War,” Ghali told CNBC.
this US benchmark The intraday high hit $73.95/barrel, an increase of about 5.5%. West Texas Intermediate crude is up about 8% this week, on track for its best weekly gain since March 2023.
Here are energy prices around 1pm ET on Thursday:
- West Texas Intermediate Oil November contract: US$73.64 per barrel, up US$3.54, or 5.05%. U.S. crude has gained nearly 3% so far this year.
- Brent December contract: US$77.43 per barrel, up US$3.53, or 4.78%. The global benchmark is slightly ahead so far this year.
- RBOB gasoline November contract: $2.085 per gallon, up 4.99%. Gasoline prices have fallen about 1% so far this year.
- natural gas November contract: $2.954/thousand cubic feet, up 2.36%. Natural gas prices are up nearly 18% so far this year.
Claudio Galimberti, chief economist at Rystad Energy, said that as the war in the Middle East intensifies, the risk of oil supply disruptions increases, but OPEC+ has a large amount of spare crude oil that may make up for this gap.
“This spare capacity currently prevents prices from spiraling out of control during one of the most severe and widespread crises in the Middle East over the past four decades,” Galimberti told clients in a note on Thursday.
Bjarne Schieldrop, chief commodities analyst at SEB Bank, said that if Israel attacks the Islamic Republic’s oil infrastructure in retaliation for Tehran’s ballistic missile attack, OPEC+’s spare production capacity will be enough to make up for the disruption to Iran’s exports.
However, the problem is that the world’s remaining oil production capacity is mainly concentrated in the Middle East, especially the Gulf countries, which may also be at risk if a wider war breaks out, said TD Securities’ Galli.
If Israel attacks Iran’s oil industry, traders will start to worry about supply disruptions in the Strait of Hormuz, Schilddrop said. “This will significantly increase the risk premium on oil,” he told CNBC’s “European Roadmap.” The strait is one of the world’s most important arteries for oil trade.
As a result, oil prices could surge to $200 a barrel if Israel attacks Iran’s oil infrastructure, Schieldrop said.
About The Author
