Conflict in Israel. We will feel it in our wallets
Iran’s suggestions regarding the Hamas-Israel war have impacted oil prices. The most important varieties are becoming more expensive on Friday. The situation is not helped by the fact that the United States is tightening the sanction screw imposed on Russia. All these factors may ultimately translate into fuel and commodity prices in stores.
6:18 AM EDT, October 14, 2023
Friday is marked by fluctuations in oil prices on the world markets. The WTI (West Texas Intermediate) type on October 13 in the afternoon is getting more expensive by about 3.7 percent, to a price of about $86.9 per barrel. Brent also noted a jump. Since the beginning of the day, investors are paying about 3.6 percent more for this type of crude (about $89.5 per barrel).
Iran influences the war in Israel
Bloomberg attributes this situation to the stance of Iran, one of the oil producers. The Iranian foreign minister warned that Muslim fighters may open a new front in Israel's war with Hamas, if the former decides to continue the blockade of the Gaza Strip. Observers expect an Israeli attack on this region, as authorities have already called for the evacuation of its northern part.
Tehran, in fact, is supposed to support Hamas. On Tuesday, US State Department spokesman Matthew Miller stated that Iran has been providing financial support to this organization for years. He emphasized that the United States currently has no evidence of direct involvement in the conflict.
There are also rumors that Iran is supplying weapons to fighters. If this were confirmed, it's not ruled out that the USA will react by imposing sanctions on this country.
Investors are protecting themselves
The agency emphasizes that current fluctuations in the price of oil are a reflection of investor uncertainty. Some of them are deciding to contract supplies now to guard against potential further risk of price increases. Analysts are already predicting that in the first half of 2024, a barrel is expected to cost over 100 dollars, which we wrote about in money.pl.
Goldman Sachs analysts in their analysis pointed to two factors influencing potential price increases. The first is expected to be the potential continuation by Saudi Arabia of oil production restrictions next year. The Saudis have previously announced a reduction from 10 to 9 million barrels per day until the end of 2023.
The second factor is oil production in Iran. Bank analysts expect a gradual slowdown in the growth of Iranian extraction. Experts estimate that every 110,231 barrels per day below the previously assumed levels will result in an increase in the price of a Brent barrel by $1 at the end of 2024.
Oil prices are rising, as the already tense oil market now has to deal with greater geopolitical instability. It seems that energy traders are convinced that we will see supply disruptions related to conflicts in the near future – commented on the current situation Ed Moya, a senior market analyst at Oanda for Bloomberg.
The prices of oil will translate into prices in stores and at stations
The situation is not improved by the fact that in the current geopolitical environment the United States decided to enforce sanctions imposed on Russia, the producer of Ural oil. On Thursday, two ships were penalized for breaking the price limit on Russian crude oil.
The current fluctuations in oil prices are bad news for consumers. Commodity fluctuations could ultimately result in an increase in inflation in individual countries. After all, fuels are one of the most significant factors affecting prices - both directly, at gas stations, and indirectly, through an increase in costs for manufacturing and transportation companies.
