Mideast Tensions Push Oil Prices Up 3%

19 Apr 2024 , 11:11 AM

Concerns over the potential disruption of the Middle East's oil supply caused oil prices to soar $3 a barrel on Friday following news that Israeli missiles had struck an Iranian location.

The benchmark contracts increased by more than $3 before somewhat declining. Brent futures were up $2.63, or 3%, to $89.74 a barrel. The U.S. West Texas Intermediate contract that is most actively traded increased by $2.56, or 3.1%, to $84.66 per barrel.

According to a U.S. official quoted by the American news organization ABC News, Israeli missiles had struck an Iranian target.

The Iranian news agency Fars stated that explosions were heard at the airport in the Iranian city of Isafahan, however it was not immediately clear what caused them.

According to CNN, multiple planes were routed through Iranian airspace.

Iran sent hundreds of drones and missiles into Syria this weekend in retaliation for what it believed to be an Israeli strike on its embassy compound. With little damage and deaths, the majority of the drones and missiles were shot down before they could enter Israeli land.

Investors have been watching Israel's response to the Iranian drone assaults on April 13 very carefully. This week, the premium for geopolitical risk in oil prices had begun to unwind on the belief that international pressure would limit any Israeli retribution over Iran's attack.

A crucial U.S. license that allowed Venezuela to export oil to markets throughout the world was lost, impacting the world's supply of crude oil. Following Iran's drone strike on Israel this weekend, the United States also imposed sanctions on the country, targeting its unmanned aerial vehicle program. Iran is another member of OPEC.

But Iran's oil sector is not included in the sanctions.

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