What rising Middle East tensions mean for oil market
- The United States launched an air strike against a leading Iranian military commander on Friday, heightening fears of a conflict escalation in the Middle East that could hurt crude supplies in the region.
** “Today’s U.S. strike at the heart of the Iranian leadership signals a significant escalation. However, the price spike seen today has as opposed to the Aramco attack not been driven by a supply disruption.” ** “We assign a higher probability of renewed attacks on oil tankers, ships or/and energy infrastructure in the region than we do on the closure of the Strait of Hormuz, the Islamic Republic also relies on the strait for its crude exports.”** The Middle East tensions are escalating at a time when oil supplies were already tightening in response to OPEC production cuts and rising expectations for oil demand improvement off of an expected Phase 1 trade deal.
** Increasing excess productive capacity in Saudi Arabia could act as a buffer if global oil supplies are disrupted appreciably.”** The chances of a broader conflict remain below 50%, although risks are entering new territory.”
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