Gas stations are seen in Bethesda, Maryland on February 23, 2022. - Wall Street stocks fell February 22, 2022 after US President Joe Biden unveiled fresh sanctions on Moscow, while a surge in oil prices was limited by expectations the measures would not impact Russia's crude production. (Photo by MANDEL NGAN / AFP) MANDEL NGAN/AFP via Getty Images
Oil prices are beginning to rise, following recent conflicts between Israel and Hezbollah, as well as fears of potential Iranian retaliation.
Vivek Dhar, a mining and energy commodities strategist at the Commonwealth Bank of Australia, told CNBC that these tensions will keep oil prices high in the coming weeks. Dhar predicts that Brent crude could trade between $75 and $85 per barrel in September due to the ongoing instability.
The latest surge in oil prices came after Israel's Air Force conducted extensive strikes on targets in Lebanon. The Israeli military's actions were a response to over 320 rockets launched by Hezbollah into Israel.
This confrontation has raised concerns about the possibility of a wider conflict in the region, which could further disrupt oil supplies.
U.S. West Texas Intermediate (WTI) crude also saw an increase, trading at $75.39 a barrel, while Brent crude rose to $79.55.
The potential impact on oil supply is considerable.
Dhar notes that if the conflict escalates and Israel targets Iran's oil infrastructure, 3% to 4% of the global oil supply could be at risk. This potential disruption adds to the market's anxiety, pushing prices higher. The situation is further complicated by the lack of progress in ceasefire talks in Gaza, which could influence Iran's response and impact oil markets even more.
As the situation evolves, oil markets will continue to react to new developments. The risk of a prolonged conflict in the Middle East remains an important factor in the oil price outlook. Analysts will be closely monitoring how the conflict unfolds and whether it leads to further disruptions in oil supply, according to LiveMint.
Join the Conversation