2024-04-14 03:22:47
Market Watch reported on the 12th (local time) that if Iran, one of the world’s largest oil producers, attacks Israel and directly intervenes in the war in the Gaza Strip, oil prices will easily exceed $100 per barrel due to chaos in the Middle East. did.
Manish Raj, managing director of Velandera Energy Partners, said, “There are no crude oil short sellers due to concerns that the conflict could intensify over the weekend.” Iran’s attack was retaliation for the death of seven Iranian military officers in an Israeli airstrike on the Iranian consulate in Syria on the 1st of this month.
US President Joe Biden confirmed that Iran’s attack on Israel was imminent and warned against an actual attack. According to the Wall Street Journal (WSJ), there is a possibility that an attack will occur on the 12th or 13th.
The U.S. Embassy in Jerusalem, Israel, issued a travel advisory to American citizens residing in Israel the day before, telling them not to travel to areas other than major cities such as Tel Aviv.
Oil prices are on the rise along with heightened tensions in the Middle East, with U.S. benchmark crude oil futures rising 5% and global benchmark Brent crude oil rising nearly 6% this month.
This attack could raise oil prices because Iran could blockade a major oil transport hub called the Strait of Hormuz. “Iran’s secret weapon is the ability to block the Strait of Hormuz,” Raji said, adding that the current situation already justifies WTI above $90.
According to the U.S. Energy Information Administration, oil flow through the Strait of Hormuz in the first half of 2023 will average 21 million barrels per day, accounting for 21% of global oil consumption. Seven million barrels of Saudi Arabian crude oil passes through the Strait of Hormuz per day.
Rob Tummel, senior portfolio manager at Turtle, said, “An oil supply shortage is expected in the second and third quarters of this year, so if supply disruptions even extend to Iran, inventories may decrease further and oil prices may rise.”
Iran is the third largest oil producer in the Organization of Petroleum Exporting Countries (OPEC) and its daily oil production is estimated at about 3 million barrels.
A change of 1 million barrels of crude oil in typical supply and demand would raise prices by $5 or more to balance the market, said Jay Hafield, CEO of Infrastructure Capital. As a result, oil prices could rise by $15 per barrel if all production in Iran were halted, he added.
Tommel, manager of Tuttle, said, “There is already a slight geopolitical risk premium (estimated at $5 to $7) embedded in the current oil price.” “It could reach $100 per barrel,” he predicted.
However, all geopolitical risks can be offset by the supply volume that OPEC+ can resume supply to the market in a short period of time. “OPEC+ could meet again on June 1 to increase global oil supplies,” Tommel said.
Hatfield predicted that the most likely scenario now is that “there is no immediate disruption in Iranian supplies, which alleviates some of the upward pressure on oil prices.”
(Seoul = News 1)
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2024-04-14 03:22:47