Risk of regional conflict drives oil price surge after Israel's strike on Iran
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Israel's strikes against Iran Thursday night immediately sent oil prices up sharply, with Brent now trading at its highest level since early April.
Why it matters: Traders are responding to risk that the conflict could spread in ways that affect regional oil production and transport.
What they're saying: Oil prices' "ultimate landing point will likely hinge on whether Iran revives the 2019 playbook and targets tankers, pipelines, and key energy facilities across the region," RBC Capital Markets Helima Croft said in a note, referring to the 2019 Iranian-backed strike on Saudi facilities.
- She also notes that Israel does not appear to have targeted Iran's main oil export infrastructure, but said it could occur if there's an "extended" military operation.
What we're watching: "If oil is caught in the cross-fire, we anticipate that President Trump will seek OPEC spare barrels to try to keep a lid on prices and shield US consumers from the economic impact of the Middle East conflict," Croft writes.
The bottom line: Barclays' Amarpreet Singh said in a note: "So far, these attacks have had no effect on oil market fundamentals but the risk of that eventuality has obviously increased."
