Oil prices surged to their highest since January after the United States over the weekend joined Israeli strikes on Iran’s nuclear facilities, raising concerns about the stability of energy supplies. About this informsReuters agency.
Brent crude futures rose $1.52 (1.97%) to $78.53 a barrel, while WTI rose $1.51 (2.04%) to $75.35. Prior to that, both indicators had jumped more than 3% to $81.40 and $78.40, respectively, marking five-month highs, before correcting slightly.
The reason for the jump was the announcement by US President Donald Trump that he had “destroyed” Iran’s key nuclear facilities during attacks carried out in cooperation with Israel, amid the escalation of the situation in the Middle East. Iran, in turn, promised to respond. It will be recalled that the country is the third largest producer of oil in OPEC.
Market participants do not rule out a further increase in the price of oil amid fears that Iran may carry out its threat to block the Strait of Hormuz, a route through which about 20% of the world’s oil exports pass.
“The ongoing geopolitical escalation is a key factor that could push Brent prices even higher to $100, with $120 a barrel looking increasingly realistic.” said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet.
Iranian state television Press TV reported that the country’s parliament had decided to close the strait. Previously, such threats were made repeatedly, but they were never implemented.
“Risks of oil infrastructure damage have increased significantly”, — noted Sparta Commodities senior analyst Jun Guo.
She noted that although there are alternative routes in the region, part of the supplies will not be able to be implemented in case of blocking the Strait of Hormuz. Shipping companies are also increasingly avoiding the region, she added.
According to the Goldman Sachs forecast, if transportation through the Strait of Hormuz is cut in half for at least a month, the price of Brent could temporarily reach $110 per barrel, and the supply reduction will continue for about 11 months at the level of 10%.
