Fasten your seatbelts, oil markets are bucking again. Crude futures whipsawed in a frenzy Thursday as fears of a new Mideast powder keg erupted between historic rivals Israel and Iran.
After getting clobbered early, U.S. oil prices skyrocketed to recoup all losses and then some. West Texas Intermediate crude for May delivery rocketed $1.16 higher to settle at $86.59 per barrel. Meanwhile, global benchmark Brent crude leapt $1.30 to $90.65.
The spiky turnround came as tensions reached a fever pitch over tit-for-tat strikes between the Israeli military and Iran-linked forces in Syria. According to reports, Israel put its embassies on maximum alert after launching missiles at Iranian targets in Damascus. Tehran is vowing a brutal reprisal.
In a harbinger of potential escalation, the Israel Defense Forces didn’t mince words either. They canceled leave for all combat troops and are gearing up for whatever payback Iran might unleash.
The fresh friction between these bitter enemies showed how geopolitical risks can whiplash oil in either direction at any moment. Crude prices have gone for a wild ride in 2023 amid banking turmoil, Russian supply curbs, and China’s rebound. But Mideast conflict eclipses all else.
After three straight monthly gains, U.S. crude has now rallied over 21% since January as global supplies tighten. Brent’s 2023 surge tops 7.7% on fears of potential shocks rippling across this strategically vital region.
Even the slightest disruptions at obvious hotspots like the Strait of Hormuz shipping chokepoint could trigger outright shortages given how little spare capacity exists worldwide. So oil traders are strapping in for more turbulence.
Whether this latest Israel-Iran melee settles down or spirals into outright confrontation is anyone’s guess. But crude markets are sending an unambiguous signal – be ready for the worst.
