Oil Prices Soar $3 a Barrel Amid Reports of Israeli Missile Strike in Iran
In a dramatic turn of events, oil prices surged $3 a barrel on Friday following reports of Israeli missiles striking a site in Iran. The news sparked concerns about potential disruptions to Middle East oil supply.
The benchmark contracts saw a sharp increase of over $3 before slightly easing. By 5:00 a.m. Saudi time, Brent futures had risen by $2.63, or 3 percent, reaching $89.74 a barrel.
Meanwhile, the most active US West Texas Intermediate contract also climbed significantly, jumping $2.56, or 3.1 percent, to $84.66 per barrel.
According to reports from US news outlet ABC News, Israeli missiles had reportedly hit a site in Iran, leading to explosions being heard at an airport in the Iranian city of Isafahan, as reported by Iran’s Fars news agency. The cause of the explosions was not immediately known, but several flights were diverted over Iranian airspace, CNN noted.
Warren Patterson, head of commodities strategy at ING, expressed concern over the situation, stating, “If these reports turn out to be true, fears over further escalation will only grow, as well as concerns that we are potentially moving closer toward a situation where oil supply risks lead to actual supply disruptions.”
The reports have raised worries that Israel may be responding to Iran’s recent drone and missile attack. Last weekend, Iran launched a retaliatory strike after a suspected Israeli attack on its embassy compound in Syria. Most of the drones and missiles were intercepted before reaching Israeli territory, resulting in minimal damage and casualties.
Investors have been closely monitoring Israel’s reaction to the April 13 Iranian drone attacks. The geopolitical risk premium in oil prices had been decreasing earlier in the week on the belief that any Israeli retaliation would be restrained by international pressure.
In addition to the tensions in the Middle East, Venezuela also faced challenges in global oil supply after losing a key US license for exporting oil. The US further imposed sanctions on Iran, targeting its unmanned aerial vehicle following the recent drone strike on Israel. However, these sanctions do not extend to Iran’s oil industry.