Oil prices could continue to rise as fears of major production disruptions in the Middle East grow amidst escalating conflicts. Last week, crude oil saw its biggest weekly gain since March 2023, with prices soaring by nearly 9%. Experts are concerned that the ongoing tensions could spiral into a broader regional war, leading to long-term market disruptions.
Escalation of Tensions
The conflict between Israel and Iran has intensified, sparking concerns that Israel may target Iran's oil production facilities. According to a report by Axios, Israeli officials indicated they are prepared to retaliate after Iran’s recent ballistic missile attack. Meanwhile, Iranian Oil Minister Mohsen Paknejad visited Kharg Island, the heart of Iran's oil exports, reassuring the nation that the oil facilities are secure under the protection of the Revolutionary Guards Navy.
Iran remains one of the top global oil producers, exporting over 1.7 million barrels per day. Any disruption in this supply could send ripples across global oil markets.
Oil Price Movements
Despite the tensions, oil prices saw a slight retreat in early Monday trading. Brent futures fell by 0.35% to $77.78 per barrel, while WTI futures dipped 0.23% to $74.21 per barrel.
Kelvin Wong, a Senior Market Analyst at Oanda, highlighted the ongoing uncertainty: “No visible diplomatic signs or activities support the de-escalation of hostilities in the Middle East.”
Global Market Impact
The recent price surge has already benefitted energy and defense stocks, while riskier assets, such as technology stocks, may face further pressure. If the conflict escalates, this trend could persist, reinforcing demand for safe-haven assets like gold and the US dollar.
As oil prices rise, the European economy may suffer, with the euro weakening against the US dollar due to fears over higher energy costs.
Source: Euronews
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