Oil jumps 7% amid Israel-Iran strikes
Oil prices experienced volatility following a significant surge of 7% on June 13, driven by renewed strikes between Israel and Iran that raised concerns about potential disruptions to oil exports from the Middle East. Brent crude futures rose by 64 cents, or 0.86%, to $74.87 a barrel, while U.S. West Texas Intermediate crude gained 76 cents, or 1.04%, to $73.74. Earlier in the session, both benchmarks had surged over $4 a barrel before briefly falling into negative territory.
The escalation in hostilities included Iranian missiles striking Israel's Tel Aviv and Haifa, destroying homes and prompting fears among world leaders at the G7 meeting that the conflict could expand regionally. An exchange of strikes over the weekend resulted in civilian casualties, with both sides urging their populations to take precautions.
Concerns about disruptions to the Strait of Hormuz, a crucial shipping route through which about 18 to 19 million barrels of oil pass daily, have intensified. Analysts warned that even limited strikes on Iranian oil infrastructure could lead to significant price increases, with predictions of Brent crude potentially soaring to $120 if the Strait were closed.
Despite the initial price spikes, markets later eased as reports emerged suggesting Iran might seek a truce, pulling Brent back to around $73.23 and WTI to $71.77. Investment strategists noted that energy assets are currently outperforming traditional safe havens like bonds and gold amid geopolitical tensions.
Major banks, including Goldman Sachs and Citi, indicated that while current prices reflect heightened geopolitical risks, supply growth from non-OPEC producers should mitigate disruptions unless a severe crisis occurs, such as a blockade of the Strait of Hormuz.
