Oil Prices Avoid Record High Despite Iran-Israel Conflict Escalation

I avoided prices Oil Record high even after being attacked IranIsrael, the main crude producer, launches drones and missiles, threatening to escalate the conflict in the oil-rich Middle East.

On Tuesday, the world’s main oil futures traded slightly higher. The price of European benchmark Brent North Sea crude rose 0.1 percent to $90.17 a barrel. West Texas Intermediate crude, the main oil contract traded in the United States, rose 0.3 percent to $85.66 a barrel. This was after he retreated on Monday following an attack on Saturday night.

Retaliation?
Markets had been anticipating the impact of Iran’s actions with warnings issued before the attack, although it is unclear how much of a response was expected.

“The aforementioned attack caused very little damage as Israeli and coalition forces seized almost all the projects,” said Ole Hvalby, an analyst at SEB Bank.

Late Saturday and early Sunday, Iran launched more than 300 drones, cruise missiles and ballistic missiles in Israel, causing only minor damage, including a military base in the south.

Tamas Varga, an analyst at BVM Energy, said, “The market is ruling out any possible escalation in the crisis between Iran and Israel. “

Any Israeli retaliation is believed to be measured, in part because of American and international pressure to prevent the exercise.

Varga told Agence France-Presse, “Iran will also ensure that the situation does not deteriorate because they will want to continue exporting crude oil. ”

US Treasury Secretary Janet Yellen spoke about the possibility of more sanctions on Iran, which has been subject to tough US sanctions since Washington unilaterally pulled out in 2018 from the historic deal that eased sanctions -bonds in exchange for curbing Iran’s nuclear program. The sanctions led to a sharp decline in oil revenues from Iran and imposed further restrictions on trade, which helped deepen the decades-long hostility with the United States and Israel.

Low supply?
Iran still produces about 3.2 million barrels of oil per day, according to the International Energy Agency, which last year ranked as the world’s ninth largest crude oil producer. Halfby said: “Israel could put pressure on its ally, the United States, to impose tougher sanctions on Iran, a loss of between 500,000 and a million barrels a day of oil by implementing such sanctions, particularly on Iranian oil exports. supply.”

However, Iran’s daily production is expected to remain above the roughly 1.9 million barrels of oil it was producing in mid-2020, after US President Donald Trump then pulled out of the nuclear deal. .

Varga predicted that the additional oil capacity within OPEC “should be sufficient to mitigate the impact of any supply disruption” due to sanctions on Iran.

He said that this would be true as long as Saudi Arabia, the main oil producer, was not drawn into the conflict, and the Strait of Hormuz, the main sea line for transporting crude oil, remained open. “Currently, the market believes that it is possible to avoid a dangerous conflict,” said Varga.