Brent Crudes to US$108 After Attack on Iranian Energy Facilities
Oil prices surged after Iran claimed several of its energy facilities were attacked, threatening the supply of oil and gas assets to neighboring countries. Brent crude surged above US$108 per barrel after rising more than 3% on Tuesday, as Iranian state television said parts of the giant South Pars gas field and the Asaluyeh oil industry facility were hit by airstrikes. Iran said it would attack targets previously considered safe, raising the perception of a direct escalation in energy infrastructure.
The attack on Iranian energy assets deepened market disruptions already triggered by the near-halt of traffic in the Strait of Hormuz, a waterway that handles about a fifth of global oil and LNG flows. Brent crude is said to have risen nearly 80% year-to-date, with the energy surge triggering fuel shortages in Asia and raising global inflation concerns; European gas futures also surged after reports of the attack.
The market is now again making Hormuz a key variable. Iran may allow only a small percentage of ships to pass due to affiliations, while most flows remain halted. Efforts to find alternative routes—such as exporting Iraq via the Kurdistan-Ceyhan pipeline—are considered to only partially offset the losses, especially as Iraqi production is said to have fallen to around pre-war levels.
Rising fuel prices are beginning to resonate through monetary policy channels. Solar power prices in the US reportedly reached US$5 per gallon this week, heightening inflation risks and drawing central bank attention ahead of the Fed meeting on Wednesday, although interest rates are expected to remain unchanged. In the oil market itself, volatility remains high: WTI's discount to Brent briefly widened above US$11, its largest since July 2022, partly due to the hedging value surrounding the release of emergency reserves.
Westpac assesses that Brent has the potential to remain in the new regime at US$95–US$110 as long as hostilities persist and remain "technically closed." That range could rise to US$10–US$20 if major refineries are affected or additional mining is confirmed in the strait, stressing that prices remain highly dependent on evidence of physical supply disruptions and developments in shipping security. (alg)
Source: Newsmaker.id
