LONDON STRIKES BACK: OIL PRICES PLUMMET AFTER IRAN’S ATTACK ON ISRAEL
In the wake of Iran’s retaliatory strike on Israel, oil prices took a nosedive in early Asian trade.
Despite the drop, Brent crude, a crucial global oil price benchmark, was still hovering around $90 a barrel on Monday morning.
Anticipation of Iran’s actions had already driven prices up, with Brent crude reaching a six-month peak last week.
Israeli Defence Minister Yoav Gallant has made it clear that the conflict with Iran is far from over.
Energy analyst Vandana Hari observed, “The oil market currently does not perceive any immediate supply threats.”
While Brent crude might dip below $90, a significant decline seems unlikely as traders remain fixated on the risks stemming from the conflicts in Gaza and Ukraine, Hari added.
Experts also highlighted that how Israel responds to the attack will have a profound impact on global markets in the coming days and weeks.
Peter McGuire from trading platform XM.com predicted that the energy market would be turbulent, suggesting that oil prices could surge if Israel reacts forcefully to Iran’s aggression.
On the other hand, April LaRusse, head of investment at Insight Investment, predicted that markets would likely “trade sideways” until more information becomes available.
As investors pondered the repercussions of the attack, share markets in the Asia-Pacific region experienced a downturn on Monday.
While the Hang Seng in Hong Kong, Japan’s Nikkei 225, and South Korea’s Kospi all saw declines, China’s Shanghai Stock Exchange Composite managed to gain over 1%.
Meanwhile, the price of gold inched higher, nearing record highs and trading close to $2,400 per ounce.
Gold is often viewed as a safe haven during times of uncertainty and saw a significant increase ahead of the recent events.
Over the weekend, Iran launched drones and missiles at Israel in response to an attack on its consulate in Damascus earlier in the month.
Although Israel has not officially claimed responsibility for the consulate strike, it is widely believed to have been involved.
Before closing at $90.45 on Friday, the price of Brent crude had briefly touched $92.18 a barrel, marking its highest point since October.
As the seventh largest oil producer globally, Iran plays a significant role in the OPEC oil producers’ cartel.
Analysts are closely monitoring the situation to see if shipping through the vital Strait of Hormuz will be impacted.
The Strait, situated between Oman and Iran, is a crucial passage for about 20% of the world’s oil supply.
Key OPEC members like Saudi Arabia, Iran, the UAE, Kuwait, and Iraq rely heavily on the Strait for oil exports.
Over the weekend, Iran seized a commercial ship linked to Israel as it passed through the Strait of Hormuz, raising further concerns about potential disruptions in the region. — BBC
