Brent skyrockets as Middle Eastern conflict takes centre stage
The front-month ICE Brent contract has moved $4.87/bbl higher on the day, to trade at $75.17/bbl at 09.00 GMT.
PHOTO: Oil barrels with an arrow depicting the surge in price. Getty Images
Upward pressure:
Brent’s price surpassed $75/bbl on oil supply disruption fears, following reports that Iran launched over 180 ballistic missiles towards Israel on Tuesday.
In a significant escalation of tension in the Middle East, the Israel Defense Forces (IDF) confirmed that Tehran is now directly involved in the regional conflict, putting the second-largest OPEC producer’s production capabilities under direct threat.
“Crude oil prices surged higher after Iran launched a missile attack on Israel,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
The attack comes as a retaliation to Israel’s military actions in Beirut last week, which killed senior Hezbollah leader Hassan Nasrallah and other prominent leaders of the Iran-aligned militant group.
Meanwhile, Israel has vowed to strike back against yesterday’s attack, sparking further tensions in the wider Middle Eastern region.
“Attention is now fully on how Israel will respond to this latest attack,” two analysts from ING Bank remarked. “The more Iran gets directly involved in this conflict the greater the risk of oil supply disruptions,” they added.
Downward pressure:
Brent’s price gains were marginally capped by concerns about production hikes from the OPEC+ members.
“The [oil] market was spooked by reports that Saudi Arabia is willing to forge ahead with production hikes in December,” Hynes said.
OPEC+ will hold its Joint Ministerial Monitoring Committee (JMMC) meeting later today. The Saudi Arabia-led coalition, which is expected to gradually start unwinding production cuts from 1 December, “is not expected to recommend any changes to production policy,” VANDA Insights’ founder and analyst Vandana Hari said.
Demand growth concerns coming in from the world’s second-largest oil consumer, China, has also put some downward pressure on Brent.
China’s latest economic stimulus measures may not be enough to sustain economic growth in the country, market analysts said.
By Aparupa Mazumder
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