Geopolitical tensions threaten to spike oil prices by €18
The price of crude oil could increase by €18 per barrel if Iran's production decreases, according to analysts from Goldman Sachs. Iran produces nearly four million barrels of oil daily, constituting close to 4% of the world's supply, as emphasised by CNBC. The world is carefully observing the situation in Iran and Israel.
As a member of OPEC, Iran significantly influences the global oil market with its production of four million barrels daily. CNBC highlights that U.S. crude oil futures rose by nearly 5% last Thursday, with further increases occurring on Friday due to concerns over a potential Israeli strike on Iran.
"Estimates show if there is a sustained reduction in Iranian production by one million barrels per day, oil prices could increase by $20 (€18) a barrel next year," assessed Daan Struyven from Goldman Sachs, quoted by CNBC. The analyst added that OPEC+ might refrain from increasing production.
The rise in price per barrel could be limited to $10 (€9) if the United Arab Emirates and Saudi Arabia compensate for some of the production losses.
Anniversary of the Hamas attack on Israel
On 7 October 2023, Hamas, which describes itself as the Islamic "resistance movement," launched a violent attack on Israel, which responded with an occupation and bombings of the Gaza Strip. The resulting war between Israel and Hamas has since affected the oil market.
CNBC noted that oil prices in the United States experienced their third consecutive session of growth following a recent missile attack on Israel from Iran. Tensions in the region are escalating, and with them, stability in the oil pricing market is decreasing.
According to Saul Kavonic, an analyst from MST Marquee, there is a possibility of an Israeli attack on Kharg Island, which is responsible for 90% of Iran's oil exports. The island faced air raids during the Iran-Iraq war in the mid-1980s. A direct conflict between Israel and Iran would affect transit through the Strait of Hormuz, where nearly 20% of the world's daily oil production passes.
In the event of a full-scale war between Iran and Israel, says Fitch Solutions BMI, "Brent crude could reach the $90-$100 (€82-€91) a barrel range if the conflict in the Middle East escalates further."
