The Iranian missile attack on Israel initially caused black gold prices to jump, before operators put the impact of these strikes on the crude market into perspective. The price of a barrel of Brent from the North Sea for delivery in December, which was the first day of use as a reference contract, gained 2.59%, to close at $73.56.
The movement is marked, but much less than in the first minutes following the announcement of Iran’s operation, which fired dozens of missiles towards Israeli territory on Tuesday. Brent thus jumped by more than 5%, before slowing down, just like the American West Texas Intermediate (WTI) which concluded with an increase of 2.43% to 69.83 dollars, after having gained during session 5 .53%. “This attack will have consequences”warned the spokesperson for the Israeli army, Daniel Hagari, who indicated that the strikes had not caused any injuries.
“Significant escalation”
The Revolutionary Guards, Iran’s ideological army, presented this offensive as a response to the assassinations of Hamas leader Ismail Haniyeh, Hezbollah leader Hassan Nasrallah, and Abbas Nilforoushan, a deputy to the head of the Guards. “This is a significant escalation by Iran”said White House national security adviser Jake Sullivan. “In the short term, a total involvement of Iran could lead the markets to panic, and we could see the barrel rise very sharply”reacted John Plassard, analyst at Mirabaud.
This attack follows a week of intense Israeli bombings against Hezbollah, which left hundreds dead in Lebanon. “Prospect of wider conflict threatens supplies from Persian Gulf region”explains Ricardo Evangelista, analyst at ActivTrades.
Iran was the world’s ninth-largest crude producer in 2023, according to the U.S. Energy Information Administration, and has the third-largest proven reserves behind Venezuela and Saudi Arabia. Despite being subject to an embargo imposed by Washington on petroleum products, Iran continues to export massive quantities of crude. According to the Kpler firm, volumes sent abroad from the Islamic Republic have even reached their highest level this year in five years and the reestablishment of American sanctions.
An attack “telegraphed”
A disruption of Iranian exports “would have a big impact on China which, no longer receiving these barrels at discounted prices (Iran sells cheaper to convince its customers to circumvent sanctions), would have to buy them at market price from other suppliers in the Middle East. East”explained Matt Smith of Kpler. However, subsequently, the speakers were more reserved about the consequences of this new development.
“It appears that once again, the arrival of these missiles was telegraphed well in advance”commented Matt Smith: “Iran felt it had to react (…) but it could have been worse”. Many draw a parallel with the April 13 attack on Israel, presented by Iran as a response to a deadly strike on the Iranian consulate in Damascus (Syria), which did not lead to an escalation between the two countries. “Iran responds, but does not go too far so as not to provoke a new response”considers Matt Smith.This is the second time” that Iran directly targets Israel, “and generally, the effect is less the second time”tempers Mark Wagoner, of Excel Futures.
“If the situation went in the direction of escalation, it would be a different story, but for now, we’ll leave it there”continues the analyst, for whom the fundamentals continue to signal “a market with an overabundant supply”. Crude prices will “will start to decline again”he predicts. According to Naeem Aslam, analyst at Zaye Capital, “this attack is a mosquito bite, just more fireworks from Iran” and all-out war between Iran and Israel is not a credible possibility. If the market were betting on total war, crude oil prices would be according to it “close to the $100 mark”.
