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Key Takeaways
- Crude oil gained as much as 5% Tuesday as tensions escalated in the Middle East.
- Reports of Iran firing rockets towards Israel sparked concerns around disrupted supply in one of the world’s most significant oil producing regions.
- Brent crude futures briefly crossed $75 per barrel and Western Texas Intermediate (WTI) traded at nearly $72 per barrel.
Crude oil gained as much as 5% as reports of Iranian missiles targeted at Israel came in Tuesday, in an escalation of tensions in the Middle East.
The news jolted crude oil futures, which had held fairly steady in the past week, dipping briefly yesterday on news of Libya resuming oil production.
Brent crude futures briefly crossed $75 per barrel while the U.S. benchmark, West Texas Intermediate Texas (WTI), traded just below $72 per barrel as oil supply disruptions concerns rose.
Iran is a member of OPEC—a trade bloc of oil producing nations—and was the world’s ninth-largest oil producer in 2023.
Israel said Iran launched missiles towards it, in what is being construed as a direct attack. “A short while ago, missiles were launched from Iran towards the State of Israel,” the Israel Defense Forces said in a statement, Bloomberg reported.
Tensions in the middle east have been rising over the past few days after Israel launched strikes against Iran-backed Hezbollah leaders in Lebanon, likely prompting today’s action.
“The deeper the conflict intensifies, oil could indeed surge higher as risk rises that the military response veers into the oil producing area around Iran,” said LPL Financial Chief Global Strategist Quincy Krosby in a commentary.
The gains for both Brent and WTI moderated to about 2.5% in mid-afternoon U.S. trading. Despite the sharp increases Tuesday, Brent is still about 20% below its high for the year of more than $90 a barrel.