Oil prices climbed more than 1% on Tuesday as Iran’s missile attack on Israel heightened fears that the Middle East conflict could disrupt regional oil supplies.
Brent crude futures for December delivery rose 1.41% to $74.60 a barrel, while U.S. West Texas Intermediate crude gained 1.50% to $70.88. Both benchmarks had surged as much as 5% during the previous session.
Israel reported that Iran launched over 180 ballistic missiles in retaliation for the killings of Hezbollah and Hamas leaders. Iran, an OPEC member, is a significant oil producer in the region.
“Iran’s direct involvement, as an OPEC member, increases the prospect of supply disruptions,” ANZ Research noted. The bank added that Iranian oil production had reached a six-year high of 3.7 million barrels per day in August.
Israeli Prime Minister Benjamin Netanyahu vowed retaliation against Iran, whilst Tehran warned of a significant response to any counterattack, escalating concerns about a broader regional conflict.
U.S. President Joe Biden expressed full support for Israel, with the UN Security Council scheduled to meet on Wednesday to discuss the situation.
“A significant escalation from Iran risks drawing the U.S. into war,” Capital Economics said in a note. “Iran represents about 4% of global oil production, but a key factor will be whether Saudi Arabia would increase production if Iranian supply is disrupted.”
OPEC+ is meeting later today, though no policy changes are expected. The group, which includes Russia, plans to increase production by 180,000 barrels per day from December.
U.S. inventory data showed mixed results, with crude and refined product stocks falling last week, while petrol inventories increased, according to market sources citing American Petroleum Institute figures.
