Iran Attack Pushes Oil Prices Up as Israel Considers Next Move

16 Apr 2024 , 09:59 AM

Tuesday saw an increase in oil prices due to increased Middle East tensions following Israel’s military chief’s declaration that his nation would retaliate against Iran for its weekend missile and drone attack, despite requests from allies for moderation.

June delivery Brent futures had increased by 46 cents, or 0.5%, to $90.56 per barrel. May delivery of U.S. oil futures saw a 0.5% increase, or 43 cents, to $85.84 a barrel.

After Iran’s strike on Israel over the weekend turned out to be less devastating than expected, fears of a rapidly escalating conflict that may replace barrels of crude oil initially subsided. However, oil prices closed Monday’s session down.

The missiles were shot down by Israel’s Iron Dome defence system, resulting in very minor damage from the attack, which Iran said was revenge for an airstrike on its consulate in Damascus.

However, a government source stated that Israel’s Prime Minister Benjamin Netanyahu called a meeting of his defence cabinet on Monday for the second time in less than twenty-four hours to discuss how to respond to Iran’s first-ever direct attack on Israel. The market became concerned that retaliatory actions would affect the flow of oil as a result.

Iran is one of the top producers of crude oil in the Organisation of the Petroleum Exporting Countries (OPEC), producing around 3 million barrels daily.

Friday saw benchmarks surge in advance of Iran’s counterattack, sending prices skyrocketing to levels not seen since October.

Official gross domestic product data is expected on Tuesday. China is the world’s largest oil importer, and growth is predicted to have slowed to 4.6% year over year from 5.2% in the preceding three months. This would keep politicians under pressure to announce further economic stimulus plans that would raise the price of oil.

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