Global oil prices soar after Israel attacks Iran

Global oil prices surged dramatically after Israel announced it had launched an attack on Iran, marking a significant escalation in tensions in the Middle East. The price of Brent crude, a key global oil benchmark, jumped by more than 10 percent, reaching its highest level since January before easing slightly. By the end of the day, Brent crude was still trading over 7 percent higher than the previous close, at $74. 23 per barrel. This sudden increase in oil prices has raised concerns among traders and consumers alike, as any disruption in oil supplies from the energy-rich Middle East could have widespread effects. The cost of crude oil influences many aspects of daily life, from the price of filling up vehicles to the cost of goods in supermarkets. Despite the recent spike, oil prices remain more than 10 percent lower than they were at the same time last year and are well below the peaks seen in early 2022 following Russia's invasion of Ukraine, when prices soared above $100 per barrel.

The impact of the conflict was also felt in global stock markets, which saw declines across Asia, Europe, and the United States. Japan's Nikkei index fell by 0. 9 percent, while the UK's FTSE 100 dropped by 0. 39 percent. In the US, the Dow Jones Industrial Average declined by 1. 79 percent, and the S&P 500 was down 0. 69 percent. In contrast, so-called 'safe haven' assets such as gold and the Swiss franc gained value as investors sought more secure options amid the uncertainty. Gold prices rose by 1. 2 percent to $3,423. 30 an ounce, reaching their highest level in nearly two months. These assets are often seen as reliable investments during times of geopolitical tension and market volatility.

Following Israel's attack, the Israeli Defence Forces reported that Iran had launched approximately 100 drones toward Israel. Analysts have warned that energy traders will be closely monitoring the situation to see if the conflict escalates further. Vandana Hari, an expert from Vanda Insights, described the situation as 'explosive' but noted that it could be defused quickly, as happened in previous direct confrontations between Israel and Iran in April and October of the previous year. However, she also warned that the conflict could spiral into a larger war, potentially disrupting oil supplies from the Middle East. Analysts at Capital Economics suggested that if Iran's oil production and export infrastructure were targeted, Brent crude prices could rise to between $80 and $100 per barrel. Nevertheless, they added that such a price spike would likely encourage other oil producers to increase output, which would help limit the overall price increase and its impact on inflation. A spokesman for the UK motoring organization RAC said it was too early to predict how the recent rise in oil prices would affect petrol prices, noting that the outcome depends on how long wholesale fuel prices remain high and the margins retailers choose to apply.