Iran-Israel tensions threaten spike in global oil prices
Oil prices could rise by $20 per barrel if Iran's production declines, according to analysts at Goldman Sachs. CNBC emphasizes that Iran produces nearly four million barrels of oil daily, representing almost 4% of the global supply. The world is closely watching the situation between Iran and Israel.
Iran, a member of OPEC, is a significant player in the global oil market by producing 4 million barrels daily. CNBC highlights that last Thursday, futures contracts for American oil rose by nearly 5%. Another increase occurred on Friday amid fears of a potential Israeli strike on Iran.
"Estimates show if there is a sustained reduction in Iranian production by one million barrels per day, oil prices could increase by $20 a barrel next year," assessed Daan Struyven of Goldman Sachs, as quoted by CNBC. The analyst added that OPEC+ might refrain from increasing production.
The increase in the price per barrel could be limited to $10 if the United Arab Emirates and Saudi Arabia compensated for some of the production losses.
Anniversary of the Hamas attack on Israel
On October 7, 2023, Hamas, which calls itself an Islamic "resistance movement," carried out a bloody attack on Israel, which responded with an occupation and bombings in the Gaza Strip. Since then, a war between Israel and Hamas has been ongoing, affecting the oil market.
CNBC noted that oil prices in the United States recorded their third consecutive session of gains following the recent missile attack on Israel from Iran. Anxiety in the region is increasing, leading to decreased stability in the oil price market.
According to Saul Kavonic, an analyst at MST Marquee, there is the potential for a possible attack by Tel Aviv on Kharg Island, which is responsible for 90% of Iran's oil exports. This island experienced airstrikes during the Iran-Iraq war in the mid-1980s. A direct conflict between Israel and Iran would impact transit through the Strait of Hormuz, through which nearly 20% of the world's daily oil production flows.
In the event of a full-scale war between Iran and Israel, says Fitch Solutions BMI, "Brent crude could reach the $90-$100 a barrel range if the conflict in the Middle East escalates further."
