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Oil prices jump more than 4% as Iran-Israel conflict escalates
Oil prices rose more than 4% during trading on Tuesday, June 17, as the conflict between Iran and Israel escalated with no end in sight, although key oil and gas infrastructure and flows have not been significantly affected by these tensions so far.
Brent crude futures rose $3.22, or 4.4%, to $76.45 per barrel at the settlement.
U.S. crude futures also rose $3.07, or 4.28%, to settle at $74.84 per barrel.
While there was no significant disruption to oil flows, Iran decided to partially suspend gas production at the South Pars field, which it shares with Qatar, after a fire broke out at the field site due to an Israeli airstrike on Saturday. Iran's Shahrān oil storage facility was also targeted by Israeli airstrikes.
Commenting on market developments, Phil Flynn, senior analyst at Price Futures Group, said that the continued exchange of airstrikes between Israel and Iran has brought geopolitical risks back to oil markets, already aware of a tight supply-demand balance.
Flynn added: "This is not a one-off; it's more likely similar to what happened in Russia and Ukraine."
The collision of two oil tankers near the Strait of Hormuz, coupled with increased electronic interference during the conflict, highlighted the possibility of closing the strait, a vital passage for oil shipments.
Saxo Bank analyst Ole Hansen said: "The market is very concerned about any disruption to the Strait of Hormuz, but the risk of that is very low."
Hansen added that there is no desire to close the strait, given the loss of revenue Iran would suffer in such an event, and that the United States wants lower oil prices and lower inflation.
