October 02, 2024 (MLN): Oil jumped for a second day after Prime Minister Benjamin Netanyahu vowed to retaliate against Iran after it fired about 200 ballistic missiles at Israel, widening the conflict in the Middle East.
Global benchmark Brent rose 3% to trade near $75.79 per barrel, after briefly surging more than 5% on Tuesday.
While West Texas Intermediate crude (WTI) was at $72.13 per barrel, up by 3.29% on the day.
Although Israel and Iran have been facing off since the outbreak of the war in Gaza against Tehran-backed Hamas almost a year ago, previous spikes have been short-lived in the absence of actual interruptions to oil output, Bloomberg reported.
Iran pumped about 3.3 million barrels a day in September, according to a Bloomberg survey.
“While the geopolitical risk premium rose on Tuesday, our tools suggest that this premium remains moderate,” Goldman Sachs analysts including Yulia Zhestkova Grigsby wrote. “As a result, oil prices remain sensitive to supply disruption risks.”
Iran and Israel exchanged attacks earlier this year, with Tehran firing a barrage of missiles and drones in April that was flagged in advance and caused little damage.
It was followed a few days later by a limited, retaliatory Israeli strike against Iran. That week, oil ended more than 3% lower.
Crude’s advance reflects investors pricing in a renewed risk premium for the world’s most important commodity, given the Middle East accounts for about a third of global supplies.
Haven assets, including bonds, gold and the US dollar, also climbed on the latest escalation of the conflict.
While many participants have “faded the risk” of supply disruptions, energy infrastructure could become a target for either side, RBC Capital Markets LLC said in a note. Tehran and its proxies “could potentially target energy operations in other parts of the region in order to internationalize the cost if the current crisis devolves into an all-out war,” it added.
Meanwhile, OPEC+ later Wednesday is scheduled to hold an online meeting of a technical panel — the Joint Ministerial Monitoring Committee — to review global oil markets.
The group is preparing to revive some of its idled production from December, after initially delaying that plan.
Copyright Mettis Link News
Posted on: 2024-10-02T15:55:34+05:00
