Oil prices surged by $3 per barrel on Friday following unconfirmed reports of explosions in Iran, leading to concerns about potential disruptions in Middle East oil supply.
Brent futures saw a significant increase of $3.03 or 3.5%, reaching $90.14 per barrel, while U.S. West Texas Intermediate crude also rose by $3.03 or 3.66% to $85.76 per barrel in the morning of the Asian trading session.
According to Warren Patterson, ING’s head of commodity research, there have been reports of explosions in the Middle East, sparking fears of a possible Israeli response to Iran’s recent drone and missile attack.
ABC News later reported, citing a US official confirming that the explosion was caused by Israel.
Investors have been closely observing Israel’s reaction to the Iranian attacks that occurred on April 13. The geopolitical risk premium in oil prices had been decreasing earlier in the week on the assumption that any Israeli retaliation would be tempered by international pressure.
Additionally, there have been developments affecting global crude oil supply, such as Venezuela losing a crucial U.S. license that permitted the OPEC member to export oil worldwide. The U.S. has also imposed sanctions on Iran, another OPEC member, targeting its unmanned aerial vehicle following the recent drone strike on Israel.
It is noteworthy that the imposed sanctions on Iran do not extend to its oil industry.
