Oil Prices Dip as Israel-Iran Tensions Simmer
Oil prices edged lower on Thursday, retreating from a sharp spike in the previous session as investors monitored the escalating tensions between Israel and Iran. According to CNBC, U.S. West Texas Intermediate crude fell 11 cents, or 0.16%, to close at $68.04 a barrel, while global benchmark Brent lost 41 cents, or 0.59%, to settle at $69.36 per barrel.
The sudden surge in oil prices on Wednesday, which saw prices jump more than 4%, was triggered by fears of a conflict that would disrupt crude supplies. The situation appears to be dire, with Israel considering taking military action against Iran without U.S. support in the coming days, according to five people with knowledge of the situation who spoke to NBC News. President Donald Trump told reporters on Thursday that an attack could happen, although he would not call it imminent.
"I don’t want to say it’s imminent but it looks like something that could very well happen," Trump said during an event at the White House. "Look, it’s very simple, not complicated. Iran cannot have a nuclear weapon." The U.S. State Department has ordered the departure of nonessential personnel from Iraq, while the Pentagon has authorized the voluntary departure of military members’ families from the Middle East.
The departures come after Iran’s defense minister warned that the Islamic Republic would strike U.S. bases across the region if a conflict breaks out. The prospect of a conflict in the Middle East has investors on edge, with oil prices potentially spiking to $120 per barrel or more if Iran closes the Strait of Hormuz in response to an Israeli strike, according to Natasha Kaneva, head of global commodities research at JPMorgan.
Some 30% of the world’s seaborne oil trade moves through the strait, according to JPMorgan. However, Kaneva told clients in a Thursday note that the risk of an Iranian blockade is low. "Crucially, for all of recorded history, despite many threats, the Strait of Hormuz has never been closed off. Crude oil continued to flow," she said.
As the situation continues to unfold, investors are keeping a close eye on developments in the region. The CNBC report notes that Israel is considering taking military action against Iran, while the U.S. is urging restraint. The impact on oil prices could be significant, with the potential for prices to surge if the situation escalates. As Kaneva noted, "for all of recorded history, despite many threats, the Strait of Hormuz has never been closed off." However, with tensions running high, investors are bracing for the worst.
The ongoing tensions between Israel and Iran have significant implications for the global economy, with the potential for higher oil prices and reduced crude supplies. As the situation continues to evolve, investors will be closely monitoring developments in the region. According to CNBC, oil prices could spike significantly if the situation escalates, with some analysts predicting prices could reach $120 per barrel or more. The CNBC report provides a comprehensive overview of the situation, highlighting the potential risks and implications for the global economy.
The information in this article was sourced from CNBC, a leading provider of financial news and analysis. The article is based on reports from CNBC’s website, including an article titled "Oil prices today: Middle East, Israel, Iran, US" which provides detailed analysis of the situation and its potential impact on oil prices.
