Oil Pares Gain After Iran Downplays Israel’s Retaliatory Attacks - Hindustan Times
close_game
close_game

Oil Pares Gain After Iran Downplays Israel’s Retaliatory Attacks

Bloomberg |
Apr 19, 2024 11:26 AM IST

Oil pared an earlier jump, after Iranian media appeared to downplay retaliatory strikes following last weekend’s unprecedented bombardment of Israel.

Oil pared an earlier jump, after Iranian media appeared to downplay retaliatory strikes following last weekend’s unprecedented bombardment of Israel. 

Oil Pares Gain After Iran Downplays Israel’s Retaliatory Attacks
Oil Pares Gain After Iran Downplays Israel’s Retaliatory Attacks

Brent crude traded about 2% higher after earlier soaring above $90 a barrel on concerns over the potential for a wider regional conflict that could endanger crude supplies. Israel launched a strike on Iran, according to two US officials, but the Islamic Republic’s semi-official Tasnim news agency denied the reports and said that the Isfahan nuclear facility was safe.

Unlock exclusive access to the latest news on India's general elections, only on the HT App. Download Now! Download Now!

Traders have been girding for an Israeli response to last weekend’s missile and drone attack, with the rhetoric between the two escalating as Tehran warned against striking its nuclear facilities. The Middle East accounts for about a third of global crude supplies. 

Haven assets also rose as tensions ratcheted higher. Gold spiked toward a record, before giving back some of its gains, while the US dollar climbed to a multimonth high.

“Depending on the nature of strikes, we are moving closer toward a scenario where supply risks become a reality,” said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore. “The market will likely have to start pricing in an even larger risk premium.”

Crude has rallied this year, with gains driven by the worsening hostilities in the Middle East, as well as OPEC supply cuts that have tightened the market. Higher energy prices, if sustained, would boosts risks for the global economy and pose a challenge for central bankers as they seek to tame inflation.

The supply curbs orchestrated by OPEC , which include cutbacks in Saudi Arabia as well as Russia, mean that the producer group has a buffer of unused capacity of several million barrels a day. At present, the output restrictions are set to last through the first half of this year.

Read More: What Are Israel’s Options for Retaliating Against Iran’s Strike?

Among the initial reports about Iran, ABC News, citing an unidentified US official, said Israeli missiles hit a site in the country. Separately, the Mehr news agency said that flights had been suspended in Tehran, Isfahan and Shiraz.

Trading volumes spiked, with over 430,000 lots of Brent and nearly 350,000 of West Texas Intermediate traded by 1 p.m. in Singapore, far more than usual. There was also active trading of Brent June and July call options — which profit when prices gain. The premium of call options over put options also surged to around the highest since October.

“We continue to highlight the heightened risk that this war will move up the escalation ladder,” RBC Capital Markets LLC analysts including Helima Croft said in a note before crude’s spike. “Oil supplies could be caught in the cross-hairs of this metastasizing conflict.”

To get Bloomberg’s Energy Daily newsletter into your inbox, click here.

With assistance from Elizabeth Low.

This article was generated from an automated news agency feed without modifications to text.

Elevate your career with VIT’s MBA programme that has been designed by its acclaimed faculty & stands out as a beacon for working professionals. Explore now!

Discover the complete story of India's general elections on our exclusive Elections Product! Access all the content absolutely free on the HT App. Download now!
Get latest news on Education along with Board Exam, Competitive Exam and Exam Result at Hindustan Times. Also get latest Job updates on Employment News
SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Saturday, May 25, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On