from refineries in the northern Persian Gulf of Iran.
Said Alazade | AFP | Getty Images
Market observers said oil prices could soar to $100 a barrel or more after Iran launched airstrikes against Israel that reignited fears of a regional war.
Iran is rich in oil resources and is the third largest producer in the Organization of the Petroleum Exporting Countries (OPEC). Analysts said any disruption to supply capacity in global markets could lead to higher oil prices.Markets will also be closely watching developments or closures in the Strait of Hormuz, the key chokepoint between Iran and Oman through which One-fifth of global oil production It’s flowing every day.
Andy Lipow, president of Lipow Oil, said: “Any attack on Iranian oil production or export facilities will push Brent crude prices to $100, while the closure of the Strait of Hormuz will cause prices to drop below $100.” In the $120 to $130 range.
Iran fired more than 300 drones and missiles at Israel on Saturday night, marking a Iran launches first direct military attack About the Jewish state. A ‘The vast majority’ of Iranian drones and missiles interceptedIDF spokesman Major General Daniel Hagari said. He said a 10-year-old girl was “severely injured by shrapnel” but there were no other casualties.
Underinvestment makes supply more fragile, increasing the likelihood of a super spike in prices well beyond $100 if supply is disrupted.
Josh Young
Portfolio Manager at Bison Interests
Iran’s attack was in retaliation for Israel’s attack on its consulate in Damascus, Syria, earlier this month. Iran blames Israel for bombing part of its embassy compound on April 1, killing seven Iranian military personnel, including three senior commanders.
Iran’s UN mission The statement said that after the air strike, “the matter can be considered over.” But it warned that if Israel retaliated further, its response would be “more severe”.
This situation is exacerbated by underinvestment
Oil prices were slightly lower in early Asian trading. Global benchmark Brent crude oil fell 0.31% to $90.17 a barrel on Monday, while U.S. West Texas Intermediate crude futures fell 0.44% to $85.28 a barrel.
Josh Young, portfolio manager at oil and gas investment firm Bison Interests, said recent geopolitical developments, coupled with years of underinvestment in oil exploration and development, have made global crude supplies more vulnerable.
“Underinvestment makes supply more fragile and increases the likelihood that prices will surge well above $100 if supply is disrupted,” he said.
Oil prices since the beginning of the year.
“I think oil prices will reach record highs this cycle due to a decade of underinvestment in exploration and development,” Yang added.
Oil production faces a significant natural decline. According to statistics, without any capital expenditure, the decline rate of conventional oil wells is about 15% Morgan Stanley’s estimate.
Oil prices have risen in recent months as trade disruptions and delays have been caused by maritime attacks in the Red Sea by the Houthis, who claim solidarity with the Palestinian people.
Increase sanctions on Iran?
As a dominant force in Middle East politics, Iran funds and supports groups that oppose Israel, such as the Palestinian militant group Hamas, Lebanon’s Hezbollah, Yemen’s Houthis and Bashar al-Assad’s Syrian government.The ongoing conflict in Gaza is often called A proxy war between Israel and Iran.
US President Joe Biden condemned Iran’s attacks on Israel, adding that Washington helped “shoot down nearly all incoming drones and missiles”.
Biden also said: “Our commitment to Israel’s security and security from Iran and its proxies is ironclad.” Represented separately on social media platform X.But he also told Israeli Prime Minister Benjamin Netanyahu that the United States would not participate in attacks against Iran, a senior administration official told NBC News.
Betashares chief economist David Bassanese wrote in a report after the attack that if Iran further escalates hostilities, the United States and its allies will face “new pressure to once again tighten sanctions.”
He added that Iranian oil exports had increased over the past few years and that the United States “seems to have passively accepted this as a means of maintaining downward pressure on world oil prices”.
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