**Oil Prices Surge as Tensions Rise Between Israel and Iran**
The global energy market is on high alert as the standoff between Israel and Iran continues to escalate. On Monday, U.S. crude oil prices jumped by 2%, fueled by speculation about a potential Israeli strike on Iran’s oil facilities. This comes on the heels of a dramatic 9.09% surge in West Texas Intermediate last week, marking the largest weekly gain since March 2023.
The global benchmark Brent also saw a significant increase, rising 8.43% last week, its largest weekly advance since January 2023. The market is bracing for a potential disruption in oil supplies, which could have far-reaching consequences for the global economy.
President Joe Biden has urged Israel to exercise restraint, warning against striking Iranian oil facilities or nuclear sites. However, the uncertainty surrounding Israel’s response to Tehran’s ballistic missile attack has left the market on edge.
According to Helima Croft, head of global commodity strategy at RBC Capital Markets, the impact on the oil market would be significant if Israel were to target Kharg Island, a critical hub for Iran’s crude exports. “We do really have to see what the Israelis hit, what would the Iranian response mechanism be,” Croft cautioned.
Alan Gelder, vice president of oil markets at Wood Mackenzie, warned that the worst-case scenario would be a disruption in the Strait of Hormuz, a vital waterway through which 20% of the world’s crude exports flow. If Iran were to target the strait in response to an Israeli strike, it could have a devastating effect on global oil prices.
As the situation continues to unfold, investors are closely watching the developments and bracing for potential volatility in the energy market.
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