Unlock the US Election Countdown Newsletter for free
Important stories about money and politics in the race for the White House
Oil prices posted their biggest weekly rise in nearly two years as traders speculated that either Israel or Iran could attack energy infrastructure in the world’s most important oil exporting region.
Brent crude, the global oil benchmark, settled at $78.05 a barrel on Friday, up more than 8% from last Friday after four days of strong gains. This was the largest weekly increase since January 2023.
The price hike comes as tensions in the Middle East raise fears of violent disruption to the region’s exports, which produce a third of the world’s oil.
US President Joe Biden said on Thursday that Israel had discussed attacking Iranian oil facilities in retaliation for a barrage of Iranian missiles fired at Israel this week.
He said on Friday that Israel had not yet decided on a response and suggested Israel should consider other options, but his comments dampened momentum in a bull market that has already reignited fears of a resurgence in inflation. It helped soothe me.
“If I were in their shoes, I would consider alternatives to attacking the oil fields,” Biden said.
The Islamic Republic exports 1.7 million barrels of oil per day, mainly from a terminal on Kharg Island, about 25 kilometers off the country’s southern coast.
“Markets have been too comfortable overlooking geopolitical risks,” said Ben Lecoq, global head of oil at Trafigura. “Where prices go from here will depend on what specifically Israel targets inside Iran. We’re all watching and waiting.”
Analysts and traders fear that Israel could target Kharg Island and that Iran and its proxies could respond by attacking energy operations in the region.
Brigadier General Ali Fadavi, deputy commander of Iran’s elite Revolutionary Guards, warned on Friday that if Israel “mistakes a step” Iran will “target all energy sources, including power plants, oil refineries and gas fields.” .
In an interview with Al-Mayadeen, a Lebanese television station close to Iran and Hezbollah, he said that while Iran has a lot of energy infrastructure, Israel has much less and is susceptible to “precision and devastating attacks.” He said it was vulnerable to
Kataib Hezbollah, an Iranian-backed Iraqi militant group, said in a statement on Thursday that an “energy war” would lead to huge losses in global supplies, but it is the ability of other countries to export energy. he suggested. You’ll be targeted.
“If an energy war begins, the world will lose 12 million barrels of oil per day,” Kataib Hezbollah said on Telegram. “And as Kataib Hezbollah has said before, either everyone enjoys (the oil) or everyone is deprived.”
The OPEC cartel’s oil exporters, primarily in Saudi Arabia and the United Arab Emirates, have a combined surplus capacity of more than 5 million barrels per day, which could be activated if Iranian supplies are disrupted. .
But if Iran were to block tanker traffic through the Strait of Hormuz, which the U.S. Energy Information Administration calls “the world’s most important oil transportation chokepoint,” about a fifth of global consumption would be halted. This will include exports from the major Gulf producers Saudi Arabia, UAE, Kuwait and Iraq. Qatar also exports liquefied natural gas through the strait.
A complete closure of the Strait has never occurred before. Claudio Galimberti, chief economist at Rystad Energy, said if that were to happen, it would lead to a “runaway oil price” of more than $150 a barrel.
“If it lasted just 10 days, it would be a huge disruption. If it lasted a month, it would destroy the world economy.”
Recommended
During the Iran-Iraq War in the 1980s, Iran mined the strait in what became known as the Tanker War, but any effort to hold up supplies would impact Iran’s own export ability. .
“The Strait of Hormuz is important to us because we send most of our oil there, so any instability there will affect us as well.”At the moment we is not going to think about it, but if things get worse, I have no doubt that those who have the upper hand in persuading leaders to radicalize the problem will think about this. ” said an Iranian official. “If this exchange of attacks continues, it will be the worst-case scenario.”
Iranian officials are also discussing the crisis with energy exporting Gulf states, with Iranian President Masoud Pezeshkian meeting with Qatar’s Emir Sheikh Tamim bin Hamad Al Thani and Saudi Arabia’s Faisal bin in Doha this week. -Meeted with Foreign Minister Farhan.
