Oil Prices Surge Amid Middle East Tensions

Oil prices surged by about 3% following Iran's ballistic missile attack on Israel. This retaliatory move by Iran, due to Israel's actions against Hezbollah, has created significant geopolitical tension. The market anticipates potential disruptions in oil supply, especially affecting Middle Eastern producers, causing volatility in trading.

Oil prices surged approximately 3% on Tuesday after Iran launched ballistic missiles at Israel in retaliation for the latter's offensive against Tehran's Hezbollah allies in Lebanon. Brent futures increased by $1.86, or 2.6%, closing at $73.56 per barrel, while U.S. West Texas Intermediate (WTI) crude rose by $1.66, or 2.4%, settling at $69.83. Earlier, both benchmarks had soared over 5%.

Alarms echoed across Israel with explosions heard in Jerusalem and the Jordan River valley as residents sought shelter. Political risk strategist Clay Seigle mentioned Israel might expand its military offensive to strike Iran directly, putting Iran's oil assets at risk. An Israeli strike on Iranian oil facilities could disrupt more than a million barrels per day, Seigle noted.

In the Red Sea, Yemen's Iran-backed Houthis claimed responsibility for damaging two vessels near Hodeidah, aligning with Iran's proxies who could target Saudi Arabia. Analyst Tamas Varga from PVM highlighted fears of impacted oil supply and expected volatile trading. The oil market, initially near a two-week low, rebounded post-attack amid OPEC+ and Libya's production outlook, with the OPEC+ panel meeting set for October 2.

(With inputs from agencies.)