Oil prices surge amid attacks from Iran on Israel, analysts warn of volatility

In the wake of recent attacks, oil prices surged to their highest levels since early September, reaching approximately $70 per barrel this morning. Political economist Ole Gunnar Austvik warns that instability in the Middle East could lead to significant fluctuations in oil prices. “As expectations and fears grow about disruptions in supply, prices will inevitably rise,” he explained.

However, oil prices experienced a slight decline later in the evening, dipping to just under $74 per barrel by around 10 PM.

The Israeli military reported missile strikes from Iran on Tuesday evening, with Iran confirming the attacks. The Persian Gulf, a key oil-producing region between Iran and the Arabian Peninsula, plays a crucial role in global oil supply.

On Tuesday, Iran launched an extensive missile assault on Israel, reportedly firing around 180 rockets. Thankfully, initial reports indicate no serious injuries or fatalities, although two individuals sustained minor injuries, according to Israeli emergency services. The attack is seen as a significant escalation of ongoing tensions in the region. Israeli defense forces have stated that consequences for Iran are forthcoming.

The fear that the conflict might impact oil and gas exports is driving prices upward. Austvik suggests that the oil price spike could become more pronounced if production and transport become jeopardized. However, he does not foresee a drastic oil price shock just yet. “A significant oil shock would mean a price increase of about $30, which is possible, but it’s too early to conclude,” he noted, adding that past conflicts have not always severely impacted oil exports.

Meanwhile, stock markets reacted negatively to the Iranian attacks, with fears of economic repercussions affecting investor confidence. The Dow Jones industrial average fell 0.31%, while the S&P 500 index dropped 0.87%, and the Nasdaq Composite dropped 1.51%. Analysts predict that while oil stocks may perform well, the overall impact on the Oslo Stock Exchange will likely be minimal.