The world awaits the impact the U.S. and Israeli attack on Iran will have on crude oil prices. Some contend prices could soar $10 to $20 a barrel and if that’s true, it means the global cost of oil would approach the low 90s.
The strikes were intended to destroy Iran’s nuclear program and eliminate the country’s leaders. Observers said the attacks will obviously pose serious risk for the oil markets in the Middle East.
Prices closed up nearly 3% on Friday with West Texas Intermediate settling above $67 at the close.
But the response by investors is what is being closely watched, reported Yahoo Finance. Without signs of deescalation over the weekend, prices could surge upward by as much as $10 to $20 per barrel when the market reopens Sunday night, Jorge León, head of geopolitical analysis at Rystad Energy, told Yahoo Finance.
“Given the scale of retaliation, most of the strategic initiative now lies with Iran,” León said. “How Tehran chooses to respond over the next 24-72 hours — especially toward energy infrastructure or regional shipping — will be the primary driver of near-term oil market dynamics.”
While prices have yet to skyrocket as a result of the fighting, Leon said a winder conflict involving OPEC+ and other Middle East countries “would push prices even higher.”
The focus for oil markets has been on the Strait of Hormuz, a critical global shipping chokepoint that sees roughly a fifth of the world’s oil supply cross through its waters daily. The Strait is largely controlled by Iran, and vessels in the area were instructed on Saturday by Iran’s Islamic Revolutionary Guard Corps, the country’s leading military intelligence force, over the radio that “no ship is allowed to pass the Strait of Hormuz,” according to Reuters.