Oil prices jumped more than a dollar in early trading today as concerns grew over escalating tensions in the Middle East that could threaten crude production, following Iran’s major military strike against Israel.
Brent futures increased by $1, or 1.36%, reaching $74.56 per barrel, while U.S. West Texas Intermediate (WTI) crude rose by $1.07, or 1.53%, to $70.90 as of 03:30 GMT. On Tuesday, both benchmarks had already gained over 5% during trading.
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The surge on Tuesday followed Iran’s ballistic missile launch at Israel, a response to Israel’s military actions against Hezbollah, Iran’s ally in Lebanon. Brent futures closed up $1.86, or 2.6%, at $73.56 per barrel, while WTI crude settled $1.66, or 2.4%, higher at $69.83, with both benchmarks spiking over 5% earlier in the day.
In Israel, alarms sounded, and explosions were reported in Jerusalem and the Jordan River valley as residents sought refuge in bomb shelters.
Iran’s recent missile strikes on Israel were framed as retaliation for attacks on Gaza and Lebanon, as well as the assassinations of leaders from Hamas, Hezbollah, and the IRGC. Iran warned Israel against any retaliation, while Israeli officials vowed to respond to the missile launches targeting military sites.
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Iran’s role as an OPEC member raises concerns about potential disruptions to oil supply, especially as its production hit a six-year high of 3.7 million barrels per day in August. OPEC+ is set to meet to review the market but is not expected to change its output policy.South Korean President Yoon Suk-yeol is worried about energy supply impacts from the conflict and has urged a measured response from his advisers. Rising oil prices could benefit Nigeria’s fiscal position but might lead to higher petrol prices for Nigerians, who are already facing record levels above N1,000 per litre.
