A gas station in a neighborhood of Beirut.(Credit: P.H.B.)
BEIRUT— Oil prices surged on Friday following Israeli strikes on military and nuclear facilities in Iran, as the market fears disruptions in oil supplies from the region that might result from the escalation.
By 08:30 GMT (10:30 in Paris), the price of a barrel of Brent crude from the North Sea, for August delivery, had risen 6.40% to $73.80, after jumping more than 13% to $78.50, its highest level since January.
Its American counterpart, the West Texas Intermediate barrel for July delivery, climbed 6.53% to $72.48, following a surge that took it up to $77.62, also the highest level since January.
On Friday, Israel conducted a series of airstrikes against Iran, stating it targeted a hundred sites including nuclear locations, with Tehran retaliating by launching drones toward Israeli territory.
This attack occurred as Israel and Western countries suspect Iran of seeking to acquire nuclear weapons, a claim Tehran denies.
The sharp increase in oil prices is "driven by a significant increase in geopolitical risk premium," says Jorge Leon from Rystad Energy to AFP.
He estimates this premium has jumped by about "$8 per barrel, higher than the levels of October 2024" when there was an exchange of strikes between Iran and Israel for the first time in history.
According to the analyst, "the potential for further price increases remains high and will heavily depend on Iran's response."
For the oil market, in the event of an escalation, "the absolute nightmare would be a closure of the Strait of Hormuz," says Arne Lohmann Rasmussen from Global Risk Management. According to him, "if Iran blocks this narrow passage, it could affect up to 20% of global oil flows."
"It should be assumed that nuclear negotiations between the United States and Iran have now failed," he adds, as Tehran and Washington were set to meet on Sunday in Oman for further discussions.
This could pave the way for broader sanctions as part of a renewed maximum pressure strategy, significantly reducing Iran's export capacity, which is among the world's top ten oil producers.