Oil Rises After Kharg Attack Exaggerates Supply Risks
World oil prices rose again after the United States attacked Kharg Island, a major Iranian oil export hub, escalating the conflict in the Middle East. This attack is considered to increase risks to global energy supplies, which have been disrupted for more than two weeks by the war in the region.
Brent crude rose as much as 3.3% and traded around US$105 per barrel, after surging more than 40% in the past two weeks. Meanwhile, West Texas Intermediate (WTI) was near US$100 per barrel. This increase occurred after Iran launched retaliatory attacks on Israel and several Arab countries following the US attack on military facilities on Kharg Island.
The attack on Kharg widened the scope of the conflict, which had already put pressure on global oil distribution flows. The International Energy Agency (IEA) even called this disruption the largest supply disruption in the history of the world oil market. Shipping traffic in the Strait of Hormuz, a vital waterway connecting the Persian Gulf to international markets, has remained virtually halted since the conflict began.
Although Iranian media reports indicate that exports from Kharg are still operating normally, market participants still perceive increasing supply risks. Any additional disruption, no matter how small, has the potential to further tighten the oil market. This concern was further exacerbated by the disruption of export activities in Fujairah, United Arab Emirates, due to a drone attack over the weekend, although operations resumed the following day.
Currently, the market believes the oil price spike reflects the risk of supply disruptions rather than a full-blown crisis scenario. However, as long as the conflict continues and there is no clarity regarding a ceasefire, the geopolitical premium is expected to remain high. This means that oil still has the potential to fluctuate, with a tendency to remain strong as long as the threat to global supply remains unabated. (asd)
Source: Newsmaker.id
