Oil prices decline ignoring the Iranian attack on Israel.
Oil prices ignored the unprecedented Iranian attack on Israel,
declining amid expectations that the conflict would be contained.
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Brent crude rose only 0.7% at the start of trading to $91.05 a barrel, before falling to around $90.
Iran launched more than 300 rockets and drones over the weekend,
marking the first time it has struck Israel from its territory, although most were intercepted.
The attack, which had been anticipated for days, was in retaliation for a strike in Syria that resulted in the death of senior Iranian military officers.
Oil has been one of the strongest performing commodities this year,
as the “OPEC+” alliance maintains tight control over supply to deplete stocks and support prices
The latest attack escalates tensions in a region that produces about a third of the world’s crude oil.
The Iranian mission to the United Nations said the issue “can be considered over,”
which currently reduces the risk of a large-scale conflict.
Hormuz is the real danger
Focus has also been on shipping risks after Iran seized the “MSC Aries” vessel near the major waterway in the Strait of Hormuz shortly before its strikes against Israel.
The beneficial owner of the vessel is part of the “Zodiac Group,” according to data gathered by Bloomberg.
This move raises concerns about the safety of ships in the region, adding to previous logistical disturbances.
The most alarming scenario is the closure of the Strait of Hormuz.
While it is unlikely that Iran will close the strait, the risks are increasing.
Oil markets have seen significant increases in recent months,
leading to higher energy costs and posing a headache for central bank governors as they seek to curb inflation.
Before Tehran’s strike over the weekend, crude oil analysts were already discussing the possibility of prices reaching $100 a barrel again.
Last week, OPEC said oil will need to be closely monitored in the coming months to ensure a
“healthy and sustainable balance in the market,” according to a monthly report.
There are signs of rising demand.
American refineries are gearing up to boost fuel production for the summer driving season,
while the latest macroeconomic data from China suggests that the economy may be about to turn a corner.
Oil prices decline, ignoring the Iranian attack on Israel