The prices of oil ended higher on Friday amid the risks of American strikes in Iran, raising concerns of escalation in the region and disruption of global crude supply. The price of a barrel of Brent crude from the North Sea, for April delivery, rose by 2.45% to $72.48. Its American counterpart, West Texas Intermediate, for the same month’s delivery, increased by 2.78% to $67.02.
Prices are at levels unseen for about six months. “The persistent risk of an American military strike” in Iran remains “the main concern in the oil market,” summarized Carsten Fritsch, an analyst at Commerzbank.
Donald Trump stated on Friday that he was “not very happy” with the ongoing negotiations with Tehran on the Iranian nuclear issue. He also mentioned that he had not made a “final decision” on possible American strikes. Iran’s Foreign Minister, Abbas Araghchi, warned the United States on Friday against “any excessive demands” in their discussions, tempering the optimism displayed the day before at the end of a new round of talks in Geneva.
These talks mediated by Oman were seen as one of the last chances to avoid war, as the United States has deployed its largest military presence in the Middle East in decades. Washington, in particular, dispatched two aircraft carriers to the region, including the Gerald Ford, the world’s largest, expected off the coast of Israel after leaving Crete on Thursday.
“In case of an American attack on Iran, Brent prices could rise by up to $10,” said Gregory Brew of Eurasia Group. Iran is a significant oil producer and the country borders the Strait of Hormuz, through which more than 20% of the world’s production transits. “The impact on prices and its duration will depend on the extent of the measures taken by the United States and Iran’s retaliations,” Mr. Brew explained.
The tensions between the two rival countries almost overshadow the meeting scheduled for Sunday between eight members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+). “OPEC+ is expected to only slightly increase its oil production as of April,” noted Mr. Fritsch. Operators anticipate an increase in quotas by 137,000 barrels per day. “But geopolitical risks make it unlikely that prices will face downward pressure, at least for now,” concluded the analyst.
