Oil prices are expected to rise even higher in the coming week, as a result of the US attack on Iran’s nuclear sites.
It is expected that oil is likely to rise by $3 to $5 per barrel this week when trading resumes, according to analysts.
Jorge Leon, head of geopolitical analysis at Rystad and a former OPEC official, said: “An oil price jump is expected. Even in the absence of immediate retaliation, markets are likely to price in a higher geopolitical risk premium.”
In the past week, Brent futures have jumped 11 per cent since Israel attacked its nemesis with dramatic moves up and down from one day to the next.
This could lead to an increase in petrol prices.
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The price of a Brent crude barrel could gain $3 to $5 per barrel when markets open, SEB bank analyst Ole Hvalbye said in a note.
Brent settled at $77.01 a barrel on Friday but was slightly down at $72.40 on Sunday.
Saul Kavonic, an energy analyst at MST Marquee, said: “Much depends on how Iran responds in the coming hours and days – but this could set us on a path toward $100 oil, if Iran responds as they have previously threatened to.
“This US attack could see a conflagration of the conflict to include Iran responding by targeting regional American interests that include Gulf oil infrastructure in places such as Iraq, or harassing passage through the Strait of Hormuz.”
The Strait is situated at the mouth of the Persian Gulf and is a pathway for not just Iranian shipments, but those from Saudi Arabia, Iraq, Kuwait and other members of the Organization of the Petroleum Exporting Countries (OPEC).
Iran is OPEC’s third-largest crude producer and about a fifth of the world’s total oil consumption passes through the strait.
A senior Iranian lawmaker said on 19 June that the country could shut the Strait of Hormuz as a way of hitting back against its enemies, though a second member of parliament said this would only happen if Tehran’s vital interests were endangered.
SEB said any closure of the strait or spillover into other regional producers would “significantly lift” oil prices, but they saw this scenario as a tail risk rather than a base case given China’s reliance on Gulf crude.
Ajay Parmar, oil and energy transition analytics director at consultancy ICIS, said it was unlikely Iran would be able to enforce a blockage of the strait for too long.
“Most of Iran’s oil exports to China pass through this strait and Trump is unlikely to tolerate the inevitable subsequent oil price spike for too long – the diplomatic pressure from the world’s two largest economies would also be significant.”
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