They begin to rise decisively again oil priceswhich has moved very close to 80 dollars a barrel, responding to the escalation of tensions in the Middle East. For a few days now, barrel prices have been rising on the main international trading markets, reflecting the start of hostilities between Israel and Iran. And this factor is supporting the recovery of crude oil, which recently seemed destined to lose further ground due to the lack of demand and the overabundant supply of OPEC+.
Brent prices above 77 dollars
The prices of Brent of the North Sea at the Intercontinental Exchange in London were brought to 77.44 dollars a barrelshowing an increase of 8.5% on a weekly basis. Even the US Light Sweet Crude Oil or WTI on the New York Nymex market it rose in the same proportion, reaching 73.52 dollars a barrelup nearly 9% on a weekly basis.
Same movement for OPEC Basketball, a price indicator of the different qualities of crude oil marketed by the members of the cartel, which was indicated yesterday at $74.62 per barrelup sharply from the previous day’s USD 71.34/b.
Biden’s words on possible targets
Supporting the surge in prices were the words of American President Joe Bidenwho confirmed that he is “arguing” with Israel the possibility of an attack on Iranian oil facilities, to undermine one of the Middle Eastern country’s main sources of revenue, after having ruled out an attack on nuclear targets.
Israel’s response to Tehran’s missile attack, in fact, is absolutely obvious and for some days there has been talk of the possibility of attack the country’s oil infrastructure.
The risk of supply blockages is worrying
For experts Generali Investment “the most important signal to watch in the short term is the risk of supply interruption of oil,” which “would have the potential to significantly increase oil prices due to supply concerns“.
“Retaliatory attacks by Israel – it is hypothesized – could hit production sites of Iranian oil. The Houthis pro-Iranians in Yemen could intensify their attacks attacks in the Red Seafurther disrupting global trade and oil transportation in particular. And in an extreme case (tail risk), Iran could try to potentially shut it down Strait of Hormuzthrough which approximately 20 million barrels of oil and petroleum products transit (approximately 20% of global supply)”.
But modest demand can “temper” the shock
One thing is certain: oil today starts from much lower levels than a year ago, when the Hamas attack on Israel caused the price of oil to rise again, bringing it close to 100 dollars. On this occasion it starts from prices around 70 dollars, which discount the weakness in global demand and, above all, the difficulties it faces the Chinese economy.
A new surge in inflation is not ruled out
The run-up in oil prices, of course, would have knock-on effects on the general price leveldoing it again increase inflation. And what would happen to the “accommodative” policies of central banks? “Rising oil and energy prices could reignite concerns about inflation and slow down the further normalization of monetary policy. – underlines Thomas Hempell Head of Macro & Market Research at Generali Investments – It is not surprising that recent tensions have already increased oil prices, extending the recovery started by the Chinese stimulus announcements”.
