Oil prices rise more than 4% as Iran-Israel conflict escalates
Oil prices climbed over 4% on Tuesday as the Iran-Israel conflict raged with no end in sight, though major oil and gas infrastructure and flows have so far been spared from substantial impact.
Brent crude futures settled at $76.45 a barrel, $3.22, or 4.4%. U.S. West Texas Intermediate crude finished at $74.84 a barrel, up $3.07 or 4.28%.
While there was no noticeable interruption to oil flows, Iran partially suspended gas production at the South Pars field it shares with Qatar after an Israeli strike started a fire there on Saturday. Israel also hit the Shahran oil depot in Iran.
The continuing exchange of airstrikes between Israel and Iran returned geopolitical risk to oil markets already aware of a tight supply and demand balance, said Phil Flynn, senior analyst with the Price Futures Group.
"This is not a one-and-done; it's probably much more similar to Russia and Ukraine," Flynn said.
A collision of two oil tankers near the Strait of Hormuz, where electronic interference has increased during the conflict, highlighted the possibility that the vital waterway for oil shipments could be cut off.
"The market is largely worried about disruption through (the Strait of) Hormuz, but the risk of that is very low," said Saxo Bank analyst Ole Hansen.
In its monthly oil report on Tuesday, the International Energy Agency revised its world oil demand estimate downwards by 20,000 barrels per day from last month's forecast and increased the supply estimate by 200,000 bpd to 1.8 million bpd.
Source: Reuters
