Investors hope that Israel’s response to Iran’s attack this weekend, in response to an alleged strike on the Iranian consulate in Damascus, will remain limited.
Despite growing tensions in the region, the price of a barrel of North Sea oil Brent remained stable this Monday in Asia, showing almost unchanged at 90.2 dollars, a loss of 23 cents (0.2% ). West Texas Intermediate (WTI) futures for May delivery were down 29 cents, or 0.3%, at $85.37 a barrel at 4:30 a.m. GMT.
This development constitutes a relative relief following a weekend marked by an escalation of hostilities between Iran and Israel, following an Israeli attack on the Iranian consulate in Damascus at the beginning of April and to which Iran responded directly. The attack involving more than 300 missiles and drones is here first carried out by another country once morest Israel in more than three decadeswhich raises concerns regarding a wider regional conflict affecting oil traffic in the Middle East.
“This war can calm down if Israel follows US advice and does not retaliate“, writes RBC Capital Markets analyst Helima Croft. There is no record spike like during the Russian invasion of Ukraine in February 2022. However, the price of oil has been rising steadily since the start of 2024due to strong demand driven by a healthy global economy facing sustained production discipline from the OPEC oil cartel.
3
millions
Iran currently produces more than 3 million barrels per day (bpd) of crude oil as a major producer within OPEC.
“An attack was largely assessed in the days leading up to it. Moreover, the limited damage and the fact that there were no casualties means that Israel’s response may be more measured “, declared for his part Warren Patterson, head of commodities strategy at ING. “But it is clear thatthere is still a lot of uncertainty and everything will depend on how Israel reacts.”
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What are the risks for oil supplies?
With Iran currently producing more than 3 million barrels per day (bpd) of crude oil as a major producer within OPEC, supply risk includes stricter application of oil sanctions and Israel’s response might include targeting Iran’s energy infrastructure, ING said in a note Monday.
But if there were a significant loss in supply, the United States might release more crude oil from its strategic oil reserves, while OPEC has more than 5 million bpd of spare production capacity, the agency said.
“If prices were to rise significantly following supply losses, one might imagine that the group would seek to put part of this reserve capacity back on the market. OPEC will not want prices to rise too high given the risk of demand destruction.”
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Gold up slightly
In other segments of the financial markets, optimism also prevails, with the general view being that the conflict will not intensify. The price of l’ortraditional safe haven in times of uncertainty, shows a slight increase, reaching 2,355 dollars per ounce.
On Asian stock markets, losses generally remain contained. In Japan and South Korea, most indices are down by around half a percentage point, while in China, a rebound is seen following recent declines.
