Future contracts of gross oil rose about 4% on Sunday night after the US launched attacks on Saturday against Iranian targets in Fordo, Isfahan and Natanz. The action surprised investors who expected a possible intensification of diplomacy after Trump said on Friday that he would make the decision to attack Iran “in the next two weeks,” according to the White House.
At around 7 pm GMT, the US WTI climbed 3.83%to $ 76.67 per barrel, while Brent, a global reference, it advanced 3.75%to $ 79.90 per barrel.
Already the futures of action in the US registered low on Sunday night. Futures linked to Dow Jones Industrial Averag lost 257 points, or 0.6%, in the first pre-market movements. S&P 500 futures also fell about 0.6%, while Nasdaq 100 futures lost 0.7%.
“When there is a conflict, there is an exaggerated reaction-an impulsive reaction-which tends to be an exaggeration, which can last from two to three weeks,” said Jay Woods, a global chief strategist at Freedom Capital Markets. “With Ukraine, the S&P 500 fell 6% and oil fired dramatically.”
The expectation is to depend on if Iran is retaliated strongly and causes a major interruption in oil supply.
US President Donald Trump said “Obliterate” Iran’s main nuclear facilities in Saturday night attacksjoining an Israeli attack on a climb of conflict in the Middle East, while Tehran promised to defend herself. Iran is the third largest oil producer in the organization of oil exporting countries (OPEC).
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“A leap in the price of oil is expected,” said Jorge Leon, chief of geopolitical analysis of Rystad and former OPEC employee during Sunday afternoon before the first negotiations. “Even in the absence of immediate retaliation, markets are likely to precede a higher geopolitical risk award.”
Until last Friday, Brent had risen 11%, while WTI valued about 10% since the beginning of the conflict on June 13, with Israel aiming at Iran’s nuclear facilities and Iranian missiles reaching buildings in Tel Aviv.
The currently stable supply conditions and the availability of surplus production capacity among other OPEC members limited oil gains. Risk awards decreased since no supply interruptions occurred, said Giovanni Staunovo, an analyst at UBS.
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(with international agencies)
