A wider conflict between Israel and Iran could disrupt global oil supplies, with the latter being the seventh-largest oil producer
Global markets are watching oil prices after Brent crude jumped 10% to reach $77 a barrel yesterday. The rise reflects growing concerns over a wider conflict between Israel and Iran.
The jump came after President Joe Biden suggested the US would support Israel in attacking Iranian oil facilities.
Tensions between Israel and Iran have escalated after Iran launched one of the largest ballistic missile attacks in history against Israel this week.
The Middle East is responsible for a third of the global oil supply, and a wider conflict could disrupt supplies.
Iran is the seventh-largest oil producer. It pumps approximately 3.3 million barrels a day and exports about half of its production to China. Analysts say any interruptions in Iran’s oil supply could worsen geopolitical tensions.
The news raised concerns about higher gas prices as America gears up for the presidential election. Last week, the average price for regular gasoline was $3.18 per gallon, down about 13% since April.
Economic concerns
Lower gas prices earlier this summer helped reduce US inflation.
Analysts warn that disruptions to major oil routes, like the Strait of Hormuz, could lead to an increase of $28 per barrel, or about 67 cents per gallon. Investors are already betting that oil prices could go above $100 a barrel, per ClearView.
Meanwhile, G7 leaders are also attempting to moderate Israel’s response to Iran’s actions amid these escalating tensions.