Fear over Israel striking Iran’s oil infrastructure has led to fears about the supply chain and a rise in U.S. crude oil, reports CNBC.
As tensions rise in the Middle East, a potential war breaking out between Israel and Iran could bring with it disruptions to the oil supply chain.
U.S. crude oil prices rose 5% yesterday for the third consecutive session, with the U.S. benchmark having increased by 5.5% to $73.99 per barrel shortly prior. West Texas Intermediate is set to see its best weekly gain since March.
Claudio Galimberti, chief economist at Rystad Energy, said that a stockpile of spare crude kept by OPEC+ is helping prevent runaway prices. However, the bulk of this spare capacity is stored in the Middle East and Gulf states, making it at risk if a war breaks out, added Daniel Ghali, senior commodity strategist at TD Securities.
In the event that Israel does strike Iran’s oil production, the Strait of Hormuz—one of the most important trade routes for oil in the world—may experience disruptions, explained Bjarne Schieldrop, chief commodities analyst at the Swedish bank SEB.
This would lead to a considerable risk premium being added to oil, with prices potentially surging to $200 a barrel.
