Middle East Tensions Escalate: Israel-Iran Conflict Triggers Global Oil Price Fluctuations

The Middle East situation has suddenly escalated, with Iran launching missile attacks on Israel, sparking global concern over possible Israeli retaliation. President Biden stated that the U.S. is discussing whether to support Israel in striking Iran's oil facilities.

With Iran's daily production exceeding 3 million barrels, a disruption in supply could have a significant global impact. WTI crude oil futures surged over 5.69%, while Brent crude futures rose 4.98%, both hitting recent highs.

Analysts believe the oil price trend hinges on Israel's response. If Israel targets Iran's oil infrastructure, global supply could face a 4% risk. Bjarne Schieldrop, Chief Commodity Analyst at SEB, warned that destroying Iran's facilities could push oil prices above $200.

Israeli Prime Minister Netanyahu has taken a tough stance, vowing a strong response to Iran. Meanwhile, Iran's President has stated that they do not seek war but will respond strongly to further actions.

While Biden mentioned ongoing discussions, he does not expect Israel to retaliate immediately. Analysts point out that the market may be underestimating the tension in the Middle East, potentially leading to excessive bearishness.

The energy market appears too complacent, and short positions could be squeezed out. Analysts warn that the market needs to be vigilant of geopolitical risks, and any price rebound could be exacerbated by previous extreme bearishness.

In the long run, price increases may be limited, as OPEC members could restore supply in emergencies. The market should focus on Israel's response and whether Iran's oil industry sustains damage.