Brent crude surges amid mounting tension between Israel and Iran

The front-month ICE Brent contract has moved $5.21/bbl higher on the day, to trade at $74.24/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Brent crude’s price has rallied over 7% following reports that Israel struck a major nuclear facility in Natanz, Iran earlier today.

Israel has targeted Iran’s nuclear facilities, ballistic missile factories and military personnel in the recent attack, the country’s military said.

“This has elevated geopolitical uncertainty significantly and requires the oil market to price in a larger risk premium for any potential supply disruptions,” ING Bank’s head of commodities strategy Warren Patterson remarked.

The news comes ahead of the sixth round of US-Iran talks in Oman later this week. The US has denied any involvement in these strikes.

“This follows threats from Iran that it will target US military bases in Iraq if a conflict breaks out,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

The risk to supply disruptions was partly offset by OPEC+ decision to ramp up production hikes.

Earlier this month, the oil producers’ group decided to collectively increase their supply by 411,000 b/d in July again – a move the coalition has stuck to for three months now. It’s leader Saudi Arabia wants to increase oil supply to regain market share, according to market analysts.

“Crude tanker loadings from OPEC nations rose 24% w/w last week to 2.28mb/d [2.28 million b/d], the highest weekly loadings since April 2023,” Hynes said citing data from global shipping association Baltic and International Maritime Council (BIMCO).

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online