Oil prices rise after Iran fires missiles at Israel

Oil prices surged after Iran fired ballistic missiles at Israel to strike back against the Israeli attack in Lebanon.

The oil market was trading at a near two-week low before Iran’s attack and the immediate fallout has been a rise in prices of oil. Brent futures shot up around 3.5 per cent, or $2.51, to cross $74 per barrel. US West Texas Intermediate crude increased by nearly 3.5 per cent, or $2.41, to scale $70.

The oil prices rise is, to an extent, driven by apprehensions of a possible Israeli retaliation to Iran’s missile strike. An Israeli onslaught could put Iranian oil properties in peril, leading to daily massive losses of millions of barrels.

As Iran’s missiles exploded in the Israeli capital city of Jerusalem and the Jordan River Valley, the government advised local people to stay in bomb shelters. “A short time ago, missiles were launched from Iran towards the State of Israel. You are asked to remain vigilant and follow the Home Front Command’s instructions precisely,” Israel Defence Forces spokesperson Rear Admiral Daniel Hagari told citizens in a statement.

Meanwhile, in the Red Sea, the Iran-backed Houthis in Yemen claimed responsibility for an attack on one of two vessels damaged off the port city of Al Hudaydah. The Houthis are supporting Palestine in the conflict between Israel and Hamas.

“In case of an escalation, Iran’s proxies, the Houthi rebels and Iraqi paramilitaries, might launch attacks on Middle East oil producers, namely Saudi Arabia,” said PVM analyst Tamas Varga, according to the news agency Reuters, and added: “There is now a genuine fear that oil supply will be impacted, and nervous and volatile trading is anticipated until the picture becomes clear.”

A panel of ministers from the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to have a meeting on October 2 to analyse the current situation.

Iran is a member of OPEC and the nation operates under US sanctions. The country produced around 4 million bpd of fuel in 2023, according to data from the United States Energy Information Administration.