Oil prices after Iran's attack on Israel

17, Apr - NEWS

For example, the Yemeni Husit attacks caused the biggest disruption to global trade since the Covid-19 pandemic. However, this did not cause any major fluctuations in the price of oil, although the disruption was not only to world trade in general, but also to oil supply in particular. Brent crude oil remained hovering at $80 a barrel.

The Hamas attack on Israel and the subsequent war did not cause a jump in oil prices, even though there was a general fear of escalation of the conflict into a major regional war involving Iran on the one hand and Israel and the US on the other, which could have directly caused a sharp jump in prices to $150-200 per barrel, since about 30% of the world's oil supply passes through the Strait of Hormuz, and Iran has the ability to block this strait. In reality, oil has fallen, not risen, since the conflict began. In October 2023, oil was $83 a barrel, and in November it was $76, and in December it was $72. This year the price has started to gradually rise, but the fact is that the wrong trend has occurred.

Last year's major geopolitical crisis was the elimination of Iranian General Qassem Suleimani by American forces. This crisis and the fear of war between Iran and the U.S. caused the price of oil to jump from $62 to $70 a barrel. Thereafter, prices rolled back.

With other crises this century, with the exception of the Iraq war, it's the same. At worst, prices rise for a few days, but sometimes they fall despite expectations of a rise.

Predicting events in the Middle East is difficult, but in this case all indications are that there will be no Israeli retaliation or it will be symbolic. Iran has already, through Egypt, asked Israel to act rationally. Also Iran initially through Turkey warned of its attack and after the attack made it clear at the level of official statements that if there is no retaliatory strike, Iran will stop. It cannot be said that Israel lost face as a result of the attack, on the contrary, everyone saw the extreme effectiveness of Israeli air defense.

Also the US administration has a strong influence on Israel and they are openly opposed to a retaliatory strike. Israel cannot ignore the US position because Israel depends on them for military equipment and cover and defense against full-fledged military action. In negotiations with the US, Israel can trade a retaliatory strike for US acquiescence to Israeli actions in Gaza.