Oil prices surged after reports of explosions in Iran, Syria, and Iraq, following a strike by Israel against Iran, raising concerns about a potential wider regional conflict that could threaten crude supplies. Global benchmark Brent briefly topped $90 a barrel before paring gains, while nuclear facilities in the targeted city of Isfahan were reported to be safe.
Oil prices are set for their first monthly gain since September amid escalating tensions between the U.S. and Iran in the Middle East. Despite a recent dip due to China's contracting factory activity, prices have risen on stronger U.S. growth, supply disruptions, and Beijing's economic stimulus efforts. President Biden has indicated a response to the death of U.S. troops, holding Iran responsible and prompting Iran to warn of decisive action in case of U.S. aggression. The potential for a wider conflict raises concerns about crude supplies, with analysts cautioning that a direct confrontation could lead to higher oil prices.
Oil prices dropped by around 2% to a three-week low due to the expiration of a higher-priced Brent contract, a stronger US dollar, and profit-taking by traders. Concerns about forecasts of increasing crude supplies and the impact of high interest rates on demand also contributed to the decline. The US dollar reached a 10-month high against other currencies, potentially slowing economic growth and reducing oil demand. Additionally, the possibility of more oil entering the market from Turkey and Saudi Arabia easing its supply cuts added to the downward pressure on prices.
