Oil prices went up by more than 2% on Wednesday because people are worried that the situation in the Middle East could get worse, which might affect the region’s oil production. This happened after Iran launched its biggest military strike against Israel.
Brent oil prices increased by $1.63 to $75.19 per barrel, while U.S. crude oil (WTI) rose by $1.70 to $71.53. Earlier, WTI had gone up by more than $2.
On Tuesday, both major oil price indexes surged by over 5% before settling about 2.5% higher.
Iran said its missile attacks on Israel would stop unless provoked, but Israel and the U.S. promised to retaliate, raising fears of a larger conflict.
An oil expert, Tamas Varga, mentioned that this could include damaging Iran’s oil infrastructure. Iran warned that any response from Israel could lead to severe consequences.
There is also concern that Iran or its allies could target Saudi oil facilities or block the Strait of Hormuz, which would push oil prices even higher.
In a related event, Israel sent military forces to southern Lebanon to fight Iran-backed Hezbollah. Meanwhile, Spain is dealing with rising gas and electricity prices due to its own energy crisis.
The United Nations and the European Union are calling for peace in the region, with a U.N. meeting scheduled for Wednesday.
Analysts also noted that Iran’s oil production reached a six-year high of 3.7 million barrels per day in August, and they warned that a major escalation could pull the U.S. into the conflict.
Iran produces about 4% of the world’s oil, but a key question is whether Saudi Arabia would boost production if Iran’s supply were cut off.
