Oil Prices Set to Rise After Iran’s Attack on Israel

Oil prices are anticipated to climb following Iran’s assault on Israel, with analysts suggesting that the extent of the increase will hinge on the reaction from Israel and the West. Iran’s launch of explosive drones and missiles at Israel, in retaliation for a suspected Israeli attack on its consulate in Syria, has heightened concerns of a broader regional conflict.

Last week, concerns over potential Iranian retaliation for the strike on its embassy compound in Damascus bolstered oil prices. Global benchmark Brent crude surged to $92.18 a barrel, its highest level since October, settling at $90.45, up 71 cents, while U.S. West Texas Intermediate crude futures rose 64 cents to $85.66. Trading is closed on Sunday.

“It is only reasonable to expect stronger prices when trading resumes,” noted Tamas Varga of oil broker PVM. “However, there has been no impact on production so far, and Iran has stated that ‘the matter can be deemed concluded.’ The rally could prove short-lived unless supply from the region is materially disrupted.”

U.S. President Joe Biden has announced a meeting of G7 leaders on Sunday to coordinate a diplomatic response to the Iranian attack. “Oil prices might spike at the opening as this is the first time Iran has struck Israel from its territory,” said UBS analyst Giovanni Staunovo. “How long any bounce will last will… depend on the Israeli response. Also, today’s G7 virtual meeting needs to be monitored, with an eye on whether they target Iranian crude exports.”

Iran has significantly increased oil exports, its main revenue source, under the Biden administration. Exports were severely curtailed under former President Donald Trump, who is set to face Biden in a presidential election rematch in November. The Biden administration has emphasized that it is not encouraging Iran to increase exports and is enforcing sanctions.

Any reduction in Iranian exports would lead to a further rise in oil prices and gasoline costs in the U.S., a politically sensitive issue ahead of the elections. Another critical factor is the impact on shipping through the Strait of Hormuz, through which about a fifth of the world’s total oil consumption passes daily.

The commander of Iran’s Revolutionary Guard’s navy has indicated that Tehran could close the strait if deemed necessary. Earlier, Iran’s state-run IRNA news agency reported that a Guards helicopter had boarded and taken the Portuguese-flagged vessel MSC Aries into Iranian waters.

Crude prices already included a risk premium, and the extent to which it will widen further almost exclusively depends on developments near Iran around the Strait of Hormuz,” said Ole Hansen at Saxo Bank.

Iran’s Attack on Israel also affected Global Equity Market as we see Gift Nifty was Sleeps from higher level

Gift Nifty Price data as on 15-Apr-2024 10:05:13

Current PriceChange (in %)VolumeFuture Expiry
22,443.50-6 (-0.03%)17,54025-Apr-2024
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Also Fii’s was sold Indian Equity -8,027 crs on Friday 12th april 24 and Dii was bought 6,341.53 crs of Indian equites. Track Daily fii dii data to know domestic and foreign trader market activity

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