By Adedapo Adesanya
A 5 per cent surge occurred in the prices of the key crude oil grades on the global market on Thursday as concerns mounted that a widening regional conflict in the Middle East could disrupt crude flows with Israel reportedly planning to target Iran’s oil and gas infrastructure.
During the session, Brent crude futures appreciated by $3.72 or 5.03 per cent to close at $77.62 a barrel and the US West Texas Intermediate (WTI) crude futures went up by $3.61 or 5.15 per cent to $73.71 per barrel.
Crude oil prices have continued to rise in the aftermath of Iran’s Tuesday attack on Israel, which involved around 200 missiles.
Following the missile barrage, Israel’s ground troops clashed with Hezbollah forces in southern Lebanon, with Israeli Prime Minister Benjamin Netanyahu vowing separate revenge on Iran.
The latest round of escalation was sparked by Israel’s sanctioned elimination of Hezbollah chief Hassan Nasrallah and Hamas political leader Ismail Haniyeh.
Israel officials said on Wednesday that the country could target Iran’s strategic energy infrastructure, including oil and gas rigs or nuclear installations, which would have the biggest economic impact, and send shockwaves through oil markets.
The tension was further sparked after US President Joe Biden indicated that there is a possibility of Israel striking Iran’s oil facilities.
He said “We’re discussing that,” adding that “There is nothing going to happen today.”
Iran is a member of the Organisation of the Petroleum Exporting Countries (OPEC) with production of around 3.2 million barrels per day or 3 per cent of global output.
Market analysts also raised concerns that such escalation could prompt Iran to block the Strait of Hormuz or attack Saudi infrastructure, as it did in 2019. The strait is a key logistical chokepoint through which 20 per cent of daily oil supply passes.
Reuters reported that ministers from Gulf Arab states and Iran attended a meeting of Asian nations hosted by Qatar to discuss de-escalating hostilities between Israel and Iran, three sources told Reuters on Thursday.
The Gulf Arab states sought to reassure Iran of their neutrality in the conflict on concerns that further violence could threaten Gulf oil facilities.
The market will weigh development coming from Libya as oil production resumed after more than a month of suspended output due to a political standoff between the eastern and western administrations in the North African OPEC producer.
The end of this Libyan crisis will lead to the return of a few hundred thousand barrels of crude per day to the market.