Brent Oil Surges to $93 Intraday
"Oil and Natural Gas Prices Rise if Iran Joins the War"
International oil prices are fluctuating significantly after the Iranian Foreign Minister called on Islamic countries to ban oil exports to Israel.
On the 18th (local time), international oil prices, which surged sharply early in the session, later saw a reduced increase but still closed significantly higher than the previous day.
According to reports from the Wall Street Journal (WSJ) and Bloomberg News on the day, Hossein Amir Abdollahian, Iran's Foreign Minister, urged Islamic countries to boycott Israel, including halting oil shipments, during a speech at the Organization of Islamic Cooperation (OIC) meeting held in Jeddah, Saudi Arabia. Influenced by these remarks and the bombing of a hospital in the Gaza Strip, Brent crude oil rose to $93 per barrel during the session.
Iran's stance is similar to the oil export ban imposed by Middle Eastern countries on the West 50 years ago in 1973. During the Arab-Israeli War at that time, Arab members of the Organization of Petroleum Exporting Countries (OPEC) banned oil exports to some countries, including the United States, which supported Israel. This led to crowded gas stations in the U.S. as people rushed to purchase oil.
In response, the British daily newspaper The Guardian commented, "The outcome of the Gaza Strip conflict has predictable historical precedents," adding, "The global boom ended around the time of the 50th anniversary of the Fourth Middle East War this year."
Previously, Israel has relied on imports for more than 60% of its oil consumption. However, it does not purchase oil from major Persian Gulf producers such as Saudi Arabia, the United Arab Emirates, or Iran.
Instead, Israel mainly imports oil from Kazakhstan, Azerbaijan, and Nigeria, where Western companies like Chevron and ExxonMobil operate joint ventures to produce oil. For this reason, experts explain that the Iranian Foreign Minister's call is unlikely to directly affect Israel's oil supply.
Subsequently, reports emerged that OPEC has no plans to impose separate sanctions on Israel regarding this matter, calming the market. The November delivery West Texas Intermediate (WTI) crude oil price closed at $88.22 per barrel, up 1.83% from the previous session. The December Brent crude price rose to $93 during the session and closed at $91.49 per barrel, up 1.77% from the previous day.
Richard Bronzes of research firm Energy Aspects said, "It would be a burden for major oil producers like Saudi Arabia to confront the Western world based on Iran's claims," adding, "So far, no other OPEC member countries have joined or expressed willingness to join Iran's stance."
However, Israel is also paying close attention to potential damages such as port destruction.
Currently, Ashkelon, Israel's main oil import port, has temporarily suspended oil imports for safety reasons. Viktor Katona of Kepler, an oil cargo tracking company, mentioned that Israel can receive oil supplies through another port in Haifa, north of Tel Aviv, but has not received fuel supplies for over a week.
The decrease in U.S. crude oil reserves is also considered a cause of rising oil prices.
The largest oil storage facility in the U.S., located in Cushing, Oklahoma, has dropped to 21 million barrels, the lowest level since 2014. Traders pointed out that this inventory is already at the minimum level for tanks to operate normally.
The possibility of Iran's involvement in the conflict remains one of the biggest uncertainties in the crude oil market. Nicholas Farr, an analyst at Capital Economics, expressed concern, saying, "If Iran becomes embroiled in the war, international oil prices will rise due to disruptions in energy supply," adding, "Natural gas prices will also be affected due to the suspension of liquefied natural gas (LNG) exports."
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