Oil Price Above $100 Depend On Latest Middle East Conflict Response

I think we have all heard the news of the Iran and Israel tensions over the weekend, there have been drones and missiles fired and intercepted, no casualties or damages have been reported.

If we can recall from our memory of the Russia and Ukraine when it first started, this episode is similar yet different, this unprecedented attack by Iran on Israel has further bring concerns of the regional tensions in the middle east.

I would be more concerned and interested on how Crude Oil price would move and the state of oil and energy stocks when market opens on Monday (15 April).

Oil Start To Open Up But Gains Depend On Response

Oil prices are expected to rise on Monday after Iran's attack on Israel over the weekend, analysts said on Sunday, but further gains may depend on how Israel and the West choose to retaliate.

On 24 February 2022 Russia launched a military invasion on Ukraine. The already inflated oil prices have since skyrocketed to over $110 per barrel. Prices of oil and gas increased sharply, with both major oil benchmarks trading at above $110.

So next few week would be crucial and I see $90 per barrel as a key level, if there is any sanction on Iran oil production export, then we shall see how things would move.

Russia did not suffer from energy exports sanctions. During that time, Europe is able to find alternatives and suggest refiners should avoid taking Russian oil supplies. But Russian managed to find the market for majority of the oil production.

The Russian and Ukraine conflict does not pose any more oil shortage risk, but now the same story might played for Iran.

Iran Crude Oil Production

Iran Crude Oil: Production was reported at 3,148.000 Barrel/Day th in Feb 2024. This records a decrease from the previous number of 3,163.000 Barrel/Day th for Jan 2024.

We need to understand that the vast majority of the exports of Iran’s crude oil foes to China, this has help to prevent a sharp increase in prices triggered by conflict in the Middle East (Hams and Israel).

But the story is different now as Iran is in the picture, oil prices has seen to be opening up on Friday (12 Apr) on potential conflict, and over the weekend, the conflict happen, now for further gains, we will need to see how Israel would choose to respond.

Oil flows would be impacted in a major way, and the nearby major oil and gas producers would be affected. We need to remember that The Middle East accounts for some 40% of global oil exports. Iran has also threatened to shut down the Strait of Hormuz connecting the Persian Gulf to the Arabian Sea, through which some 20 million b/d of seaborne crude, condensate and refined fuels pass through, along with almost 11 Bcf/d of LNG.

Summary

I think it is important to watch the development of this conflict response closely, whether oil price stability would depend on how Israel respond, and middle east countries would respond accordingly as well.

If we look at the chart of OPEC+ production, we could see that supply shortage would be a major issue.

Appreciate if you could share your thoughts in the comment section whether you think there will be a supply shortage of oil if the conflict between Iran and Israel were to continue?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.