On October 7, 2024, significant geopolitical tensions in the Middle East have led to a notable surge in oil prices, with the Brent contract increasing over 8% and the WTI contract rising by 9.1% last week, marking the largest weekly gains since early 2023. This spike is largely attributed to fears surrounding potential retaliatory actions by Israel against Iran following recent military exchanges.
Israel has conducted airstrikes on Hezbollah targets in Lebanon and Gaza, escalating tensions as the anniversary of Hamas' attacks on Israel approaches. In response, Iran launched a missile attack on Israel, intensifying the conflict. Israeli officials have indicated that all options for retaliation against Iran remain on the table, raising concerns over the impact on global oil supply.
Despite the increase in oil prices, analysts from ANZ Research suggest that the immediate impact on oil supply may be limited. They note that a direct attack on Iran's oil facilities is unlikely, as it could alienate international allies and provoke a more aggressive Iranian response. Furthermore, the research indicates that OPEC, with its substantial spare capacity, is well-positioned to mitigate any potential disruptions in oil supply.
As OPEC and its allies maintain their current production policies, the situation remains fluid, with global markets closely monitoring developments in the region. The ongoing conflict underscores the delicate balance of international relations and its direct implications for global energy markets.