Analysts are struggling to predict the extent to which Israel and Iran’s escalating conflict could influence oil prices.
Israel’s surprise attack on Iran’s military and nuclear infrastructure on Friday has been followed by five days of spiraling warfare between the regional foes.
U.S. President Donald Trump on Tuesday called for an “unconditional surrender” from Tehran, warning Washington’s patience was wearing thin. In response, Iran’s supreme leader Ayatollah Ali Khamenei threatened the U.S. with “irreparable damage” in the event of a military intervention, according to NBC News reporting.
Energy markets are weighing the likelihood of direct U.S. involvement in the conflict, as well as the potential for major supply disruptions — particularly worst-case scenarios, such as Iran blocking the highly strategic Strait of Hormuz that links the Persian Gulf to the Gulf of Oman.
John Evans, an analyst at oil broker PVM, said Wednesday that a “blanket of unease” had descended upon oil markets in recent days.
“Our market is settling into a world where missile exchanges are commonplace but the cynicism of it being normal has yet to set in because of how easily the situation could escalate,” Evans said in a research note.