U.S. and Israel Begin Major Combat Operations Against Iran, Sending Oil Markets into Turmoil

Foreign Policy reports that energy markets are bracing for disruption after the start of major combat operations by Israel and the United States against Iran, with concerns focused on strikes affecting regional oil production and crude flows from the Persian Gulf.

“Oil Markets Brace for Disruption After U”

Foreign Policy

The article says Tehran’s initial reprisals have been much broader than the symbolic strikes it launched last June, intensifying market worries about potential supply and transport disruptions.

Foreign Policy

The article documents immediate market reactions: oil prices had already crept up on Friday amid fears that diplomacy between Iran and the United States was failing, and crude prices jumped almost 3 percent in both New York and London.

Foreign Policy notes that markets were expected to open higher on Monday, with the initial spike depending on whether any Iranian responses directly impacted regional production or transport.

Foreign Policy

Market analysts and traders cited in the piece urged caution and sought concrete evidence of supply disruption before pricing in sustained losses.

“Oil Markets Brace for Disruption After U”

Foreign Policy

Richard Bronze, an oil geopolitics analyst at Energy Aspects in London, told Foreign Policy that markets would likely spike at first but could settle if there is no firm evidence of large-scale production impacts: “We will likely see a jump on Monday, but after that, if there is no firm evidence that oil production is affected at scale, the market may move on.”

He added that the prevailing trader mindset is to demand proof of disruption: “More and more, the mindset among traders is: Show me the disruption.”

The article also describes how major oil producers and OPEC may act to calm markets, noting that OPEC and its partners were set to meet on Sunday to discuss possible supply increases and that the cartel had previously suggested a collective output increase of about 137,000 barrels a day starting in April.

Foreign Policy adds that Saudi Arabia and other Gulf producers had already front-loaded shipments ahead of the brewing conflict, with shipments reaching the highest levels in several years over the past month.

Foreign Policy