Market News
Oil prices surge as much as 13% as Israel strikes Iran in major escalation - YAHOO FINANCE
Oil prices surged around 7% early on Friday morning after Israel launched airstrikes on Iran, marking a significant escalation in the Middle East conflict.
Brent crude futures (BZ=F) had jumped more than 13% in the aftermath of the Thursday night attack before paring gains. The international benchmark and its US counterpart, West Texas Intermediate (CL=F) were both changing hands at around $73 a barrel on Friday, as traders weighed the risks of escalation into war.
Israel said it conducted what it called "preemptive and precise" strikes against Iran, citing fears over development of nuclear weapons in Tehran.
"Over the past few months intelligence has shown that Iran is closer than ever to obtaining a nuclear weapon," IDF Spokesperson BG Effie Defrin said in a video statement following the attack. "This morning the IDF began preemptive and precise strikes, targeting the Iranian nuclear program."
US Secretary of State Marco Rubio said Israel took "unilateral action," saying the US was not involved in the strikes and warned Iran against targeting US interests and personnel.
Israel "struck at the heart of Iran's nuclear enrichment program," and its ballistic missile program, the country's prime minister, Benjamin Netanyahu, said in a statement. He added that the operation "will continue for as many days as it takes to remove this threat."
Iran is the third-largest oil producer within the Organization of the Petroleum Exporting Countries (OPEC), trailing only Saudi Arabia and Iraq, with output exceeding 3 million barrels per day.
“The most immediate risk is to Iranian exports, which could drop sharply from the current 1.6 to 1.8 million barrels per day if maximum pressure tactics escalate or broader disruptions occur,” Rebecca Babin, U.S. senior energy trader at CIBC Private Wealth, told Yahoo Finance Thursday night.
“There’s also the possibility — though still uncertain — of direct supply losses if Israel targets Iranian oil infrastructure,” she added.
Iran has launched 100 low-flying drones toward Israeli territory in retaliation, an Israeli military spokesman told Reuters. While the swarm is likely to take several hours to reach its target, it could just be paving the way for a missile bombardment later.
It remains unclear whether the conflict could spill over into the broader region.
“We can probably expect a temporary slowdown in oil tanker traffic through the Strait of Hormuz,” said Ed Hirs, senior fellow at the University of Houston, in an interview with Yahoo Finance.
Tehran has repeatedly threatened to block the strait, a vital chokepoint through which as many as 20 million barrels of oil pass each day.
