Oil prices soar after Israel's strike on Iran alarms market

RTÉ News​

19 hours ago

Oil prices jumped more than $4 a barrel today, hitting their highest price in almost five months after Israel struck Iran, dramatically escalating tensions in the Middle East and raising worries about disrupted oil supplies.
Brent crude futures jumped $4.60, or 6.63%, to $73.96 a barrel this morning after hitting an intraday high of $78.50, the highest since January 27.
US West Texas Intermediate crude was up $4.99, or 7.33%, at $73.03 a barrel after hitting a high of $77.62, its highest since January 21.
Today's gains were the largest intraday moves for both contracts since 2022 after Russia invaded Ukraine, causing energy prices to spike.
Israel said it targeted Iran's nuclear facilities, ballistic missile factories and military commanders at the start of what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon.
"A key question is whether the Iranian retaliation will be limited to Israel or if the leadership will seek to internationalise the cost of the action by targeting bases and critical economic infrastructure across the wider region," RBC Capital analyst Helima Croft said in a note.
Several oil traders in Singapore said it was still too early to say if the strike will affect Middle East oil shipments as it will depend on how Iran retaliates and if the US will intervene.
"It's too early to tell but I think the market is worried about shutting off of the Strait of Hormuz," one of the traders said.
Barclays analyst Amarpreet Singh said the attack has alarmed oil markets although these attacks have had no effect on oil market fundamentals so far.
"In a worst-case scenario, the conflict could expand to other key oil and gas producers in the region, and shipping," he said in a note.
The $10 a barrel price gain in the past three days had yet to reflect any drop in Iranian oil production, let alone an escalation that could involve disruption to energy flows through the Strait of Hormuz, he said.
About a fifth of the world's total oil consumption passes through the Strait or some 18-19 million bpd of oil, condensate and fuel.
Iran's Supreme Leader Ayatollah Ali Khamenei said Israel will receive "harsh punishment" following the attack that he said killed several military commanders.
U.S. Secretary of State Marco Rubio has called Israel's strikes against Iran a "unilateral action" and said Washington was not involved while also urging Tehran not to target US interests or personnel in the region.
RBC's Croft said: "If oil is caught in the cross-fire, we anticipate that President Trump will seek OPEC spare barrels to try to keep a lid on prices and shield US consumers from the economic impact of the Middle East conflict."
In other markets, stocks dived in early Asian trade, led by a selloff in US futures, while investors scurried to safe havens such as gold and the Swiss franc.