Oil prices rise as Iran-Israel conflict escalates

HOUSTON, June 17: Oil prices climbed on Tuesday as the Iran-Israel conflict raged with no end in sight, though major oil and gas infrastructure and flows have so far been spared from substantial impact.

Brent crude futures gained $2.11, or 2.88%, to $75.35 a barrel by 10:44 a.m. CDT (1544 GMT). U.S. West Texas Intermediate crude was up $1.43, or 1.99%, at $73.20.

Both contracts rose more than 3% early in the session but retreated in volatile trade before bouncing back.

While there was no noticeable interruption to oil flows, Iran partially suspended gas production at the South Pars field it shares with Qatar after an Israeli strike started a fire there on Saturday. Israel also hit the Shahran oil depot in Iran.

The continuing exchange of airstrikes between Israel and Iran returned geopolitical risk to oil markets already aware of a tight supply and demand balance, said Phil Flynn, senior analyst with the Price Futures Group.

“This is not a one-and-done; it’s probably much more similar to Russia and Ukraine,” Flynn said.

Iran Israel War News Today – ARY News

A collision of two oil tankers near the Strait of Hormuz, where electronic interference has increased during the conflict, highlighted the possibility that the vital waterway for oil shipments would be cut off.

“The market is largely worried about disruption through (the Strait of) Hormuz, but the risk of that is very low,” said Saxo Bank analyst Ole Hansen.

There is no appetite for closing the waterway, given that Iran would lose revenue and the U.S. wants lower oil prices and lower inflation, Hansen added.

Despite the potential for disruption, there are signs oil supplies remain ample amid expectations of lower demand.

In its monthly oil report on Tuesday, the International Energy Agency revised its world oil demand estimate downwards by 20,000 barrels per day from last month’s forecast and increased the supply estimate by 200,000 bpd to 1.8 million bpd.

Investors were also focused on central bank interest rate decisions, PVM Associates analyst Tamas Varga said in a note, with the U.S. Federal Open Market Committee set to discuss rates later on Tuesday.