Oil prices jumped as stocks sold off after reports of escalating tensions in the Middle East.
International benchmark Brent crude oil futures rose 4.2% before trading 2.8% higher at $89.54 a barrel as of 11:15 p.m. EDT. U.S. West Texas Intermediate futures were up 3.2% at $85.40 a barrel.
Friday’s strike took place a few days later Iran attacked Israel Saturday with a barrage of more than 300 missiles and drones. The 1st of April, the Iranian embassy in Damascus, Syria, was hit by a strike. Israel did not claim responsibility for the attack, but Iran held it responsible and promised to retaliate.
Earlier this week, Israel promised retaliation for Iranian missile and drone attacks. Oil markets ignored the Iranian attack on Israel, believing that the conflict would remain contained. Friday’s reports were a game changer.
Markets are worried by fears of a worsening conflict in the Middle East, a major oil-producing region. A wider conflict could disrupt energy supplies, which could impact the global economy.
If this information proves accurate, “fears of further escalation will only grow, along with fears that we are potentially moving closer to a situation in which oil supply risks lead to real disruptions of supply,” ING commodities strategists wrote on Friday.
“It’s a dynamic of shoot first and ask questions later for investors. It’s Israel’s ‘tat’ versus Iran’s ‘tat’, and the fear is that this tit-for-tat situation gets even more out of control,” said Kyle Rodda, a senior industry official. market analyst at Capital.com, an online trading platform, told Business Insider.
“Iran appears to be downplaying the attack for now, which tells me that it does not wish to further inflame the situation and create conditions in which it will be forced to retaliate with equal or even greater force,” he said. Rodda.
“However, the event is new and fluid, so uncertainty prevails,” he added.
Stock markets also fell following the news, while the price of safe-haven gold reached near a record high.
US stock futures fell, with the S&P500 down 1.3%.
Japan’s Nikkei 225 index was down 3.5% as of 11:16 a.m. local time.
The spot gold price was up 1.2% at $2,406.92 an ounce.
businessinsider
