International oil prices increased by 5% due to the possibility of Israeli airstrikes on Iranian oil facilities.
On Thursday, The Financial Times reported that U.S. President Joe Biden’s comments regarding ongoing discussions with Israel about airstrikes played a key role in the spike. Biden, when asked whether the U.S. was discussing Israeli airstrikes on Iran’s oil infrastructure, responded, “We’re discussing that,” but quickly hesitated, adding that he does not expect immediate retaliation from Israel against Iran.
As a result, Brent crude futures for December delivery rose by 5%, reaching $77.65 per barrel. Similarly, West Texas Intermediate (WTI) for November delivery surged by 5.15%, settling at $73.71 per barrel.
An anonymous U.S. official cited by The Financial Times noted that the U.S. expects any Israeli military response to be “calculated” to avoid escalating tensions in the volatile Middle East region.
The newspaper also reported that U.S. and Israeli government officials have recently discussed limiting Israel’s military response.
Claudio Galimberti, an economist at Rystad Energy, explained in an interview with CNBC that despite the highest tensions in the Middle East in over 40 years, the oil reserves of major producing countries in OPEC+ remain high, preventing a drastic rise in oil prices.
However, a strategist at TD Securities, Daniel Ghali, pointed out that since these reserves are concentrated in the Middle East, particularly in the Gulf region, the risk could increase if the conflict spreads.
CNBC reported that traders are particularly concerned about potential disruptions to oil supply through the Strait of Hormuz if Israel attacks Iranian oil facilities, which could significantly drive up prices.
