The risk of supply disruption due to escalating tensions in the Middle East caused world crude oil prices to increase nearly 3% this morning.
US crude oil WTI increased 3% to 85.7 USD per barrel. Brent crude oil also increased similarly, to 90.15 USD.
Prices skyrocketed after ABC News (USA) today quoted a US official as saying that Israel had launched a missile attack on Iran in retaliation for the April 13 raid.
Iran’s Fars news agency reported today three loud explosions at a military base in the city of Ghahjaworstan, northwest of Isfahan, central Iran, but the cause is unknown. CNN said some flights had to be diverted from Iranian airspace.
“If this information is true, fears of escalating tensions in the region will grow. The risk of supply disruption is approaching”, said Warren Patterson – Director of Commodity Strategy at ING. Iran is currently the third largest oil producer in OPEC (Organization of Petroleum Exporting Countries).
Last week, many analysts predicted oil prices could rise to $100 a barrel or more if tensions in the Middle East continued to escalate.
“As long as violence continues, oil prices will rise”, said Michael Lynch, a member of the Energy Policy Research Foundation (EPRINC).
Brent oil prices skyrocketed after information about Israel and Iran this morning. Graph: CNBC
After Iran’s raid on Israeli territory last weekend in retaliation for the Syrian embassy being attacked, investors have always closely followed Israel’s response.
The US this week re-imposed sanctions on Venezuela’s oil and gas industry, accusing President Nicolas Maduro’s government of not fulfilling its commitment to hold the 2024 election. Venezuela is also an OPEC country.
The US and UK on April 18 also announced sanctions against individuals and organizations related to Iran’s UAV program. However. The country’s oil and gas industry has not yet come under any further pressure.
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