Oil Prices Fluctuate Amid Middle East Tensions

HOUSTON: Oil prices experienced a decline from their peak levels earlier on Friday after Israeli airstrikes avoided Iranian oil facilities. However, prices still showed an increase of approximately 6% due to investor concerns about potential disruptions to Middle East oil supplies stemming from the heightened tensions.

Brent crude futures increased by $4.11, or 5.9%, reaching $73.47 a barrel by 11:12 a.m. EDT (1712 GMT). Earlier in the day, they had surged by over 13% to an intraday high of $78.50, marking the highest level since January 27. Similarly, U.S. West Texas Intermediate crude rose by $4.38, or 6.4%, to $72.42, after an earlier jump of over 14% to its highest point since January 21 at $77.62.

The gains observed on Friday represented the most significant intraday movements for both contracts since 2022, when the Russia-Ukraine conflict triggered a surge in energy prices.

Israel reported targeting Iranian nuclear installations, ballistic missile production sites, and military leadership on Friday. This action was described as the beginning of a sustained campaign aimed at preventing Iran from developing nuclear weapons. Iran has vowed a strong response.

U.S. President Donald Trump has encouraged Iran to negotiate a deal regarding its nuclear program to prevent further planned attacks. The National Iranian Oil Refining and Distribution Company stated that oil refining and storage sites were undamaged and operations are continuing.

According to Phil Flynn, a senior analyst at Price Futures Group, initial fears often prove to be overblown. He noted that Israeli forces did not target oil refineries, pipelines, or tankers.

Analysts indicate that a major point of concern revolves around the potential impact of recent events on the Strait of Hormuz, according to Nikos Tzabouras, senior market analyst at Tradu.com.

Tzabouras mentioned in a Friday morning note that continued upward movement in prices would necessitate real disruptions to the physical flow of oil, such as damage to Iran’s oil infrastructure or a blockade affecting the Strait of Hormuz, which is a vital global transit point.