Brent crude jumps 3.3% on fears that production or shipments could be disrupted
02 October 2024 - 13:39
by Paul Carsten
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London — Oil prices climbed more than 3% on Wednesday amid rising concerns that Middle East tensions could escalate, potentially disrupting crude output from the region, after Iran’s biggest military blow against Israel.
Brent futures reached their highest in a month, leaping $2.42, or 3.3%, to $75.98 a barrel. US West Texas Intermediate (WTI) crude spiked $2.47, or 3.5%, to $72.30 at 10.50am GMT. Both crude benchmarks on Tuesday surged more than 5% before closing about 2.5% higher.
Iran said early on Wednesday that its missile attack on Israel was over barring further provocation, while Israel and the US promised to strike back against Tehran as fears of a wider war intensified.
“This could include damaging or obliterating Iran’s oil facilities,” said Tamas Varga of oil broker PVM.
Tehran said any Israeli response to the attack, which Israel said involved more than 180 ballistic missiles, would be met with “vast destruction”.
Varga noted retaliation by Iran or its allies could strike Saudi oil facilities — as in 2019 — or see the closure of the Strait of Hormuz. “Any of these events would irretrievably send oil prices considerably higher,” he said.
In another escalation of the conflict, the Israeli military on Wednesday sent regular infantry and armoured units to join ground operations in southern Lebanon against Iranian-backed Hezbollah.
The UN Security Council scheduled a meeting about the Middle East for Wednesday, and the EU called for an immediate ceasefire.
Iran’s oil output rose to a six-year high of 3.7-million barrels per day (bpd) in August, ANZ analysts said.
“A major escalation by Iran risks bringing the US into the war,” Capital Economics said in a note. “Iran accounts for about 4% of global oil output, but an important consideration will be whether Saudi Arabia increases production if Iranian supplies were disrupted.”
A panel of ministers from Opec+, which includes Russia, will meet later on Wednesday to review the market, with no policy change expected. The group is set to raise output from December by 180,000 bpd monthly.
“Any suggestion that production hikes will proceed could offset concerns of supply disruptions in the Middle East,” ANZ analysts said.
However, Saudi Arabia’s oil minister said that oil prices could drop to as low as $50 per barrel if Opec+ members do not stick to agreed-on production limits, the Wall Street Journal reported on Wednesday citing delegates from the oil producers group.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil prices jump as Middle East tension escalates
Brent crude jumps 3.3% on fears that production or shipments could be disrupted
London — Oil prices climbed more than 3% on Wednesday amid rising concerns that Middle East tensions could escalate, potentially disrupting crude output from the region, after Iran’s biggest military blow against Israel.
Brent futures reached their highest in a month, leaping $2.42, or 3.3%, to $75.98 a barrel. US West Texas Intermediate (WTI) crude spiked $2.47, or 3.5%, to $72.30 at 10.50am GMT. Both crude benchmarks on Tuesday surged more than 5% before closing about 2.5% higher.
Iran said early on Wednesday that its missile attack on Israel was over barring further provocation, while Israel and the US promised to strike back against Tehran as fears of a wider war intensified.
“This could include damaging or obliterating Iran’s oil facilities,” said Tamas Varga of oil broker PVM.
Tehran said any Israeli response to the attack, which Israel said involved more than 180 ballistic missiles, would be met with “vast destruction”.
Varga noted retaliation by Iran or its allies could strike Saudi oil facilities — as in 2019 — or see the closure of the Strait of Hormuz. “Any of these events would irretrievably send oil prices considerably higher,” he said.
In another escalation of the conflict, the Israeli military on Wednesday sent regular infantry and armoured units to join ground operations in southern Lebanon against Iranian-backed Hezbollah.
The UN Security Council scheduled a meeting about the Middle East for Wednesday, and the EU called for an immediate ceasefire.
Iran’s oil output rose to a six-year high of 3.7-million barrels per day (bpd) in August, ANZ analysts said.
“A major escalation by Iran risks bringing the US into the war,” Capital Economics said in a note. “Iran accounts for about 4% of global oil output, but an important consideration will be whether Saudi Arabia increases production if Iranian supplies were disrupted.”
A panel of ministers from Opec+, which includes Russia, will meet later on Wednesday to review the market, with no policy change expected. The group is set to raise output from December by 180,000 bpd monthly.
“Any suggestion that production hikes will proceed could offset concerns of supply disruptions in the Middle East,” ANZ analysts said.
However, Saudi Arabia’s oil minister said that oil prices could drop to as low as $50 per barrel if Opec+ members do not stick to agreed-on production limits, the Wall Street Journal reported on Wednesday citing delegates from the oil producers group.
Reuters
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Iran launches salvo of ballistic missiles at Israel
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