Oil prices are up on Friday, after having already soared the day before, driven by the risk of Israeli strikes on oil production infrastructure in Iran.
Around 09:45 GMT (11:45 a.m. Brussels time), the price of a barrel of Brent from the North Sea, for delivery in December, rose 1.04% to $78.37, its highest level in more than a month. Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in November, gained 1.07% to $74.50.
“If there was an attack on production sites in Iran, oil supplies would be severely disrupted,” explains Naeem Aslam, analyst at Zaye Capital, returning to a statement Thursday by US President Joe Biden, during a brief exchange with the press.
Asked about his position regarding a possible attack by Israel on oil sites in Iran, the head of state replied that he was “in discussions” with the Israeli government on the subject.
After having caused oil prices to jump by 5% the day before, this response continues to push the barrel upwards.
Iran produced 3.4 million barrels per day in August according to the International Energy Agency (IEA).
The market is on alert, and “the next geopolitical event” can push prices to very high levels according to Stephen Innes of SPI Asset Management.
“No one has a crystal ball,” comments Tamas Varga, analyst at PVM, for whom the upward movement can be amplified by speculative movements on the markets.
The geopolitical risk premium thus keeps prices rising, especially as the fighting in Lebanon continues on Friday, and Iranian Supreme Leader Ayatollah Ali Khamenei declared during a speech to thousands of people in Tehran that Iran’s allies “will not back down”.
However, analysts warn of an overabundant market in the coming months.
“The market is very worried about the low demand for oil and the likely production surplus in 2025,” says Bjarne Schieldrop, analyst at SEB.
Saudi Arabia alone has excess capacity estimated at around 3 million barrels per day.
