Oil prices surge 3% on reports of Israeli strikes on Iran

Following retaliatory Israeli missiles hitting an Iranian location, oil prices surged $3 per barrel on Friday, raising fears of a disruption in the Middle East’s oil supply. The two nations’ most recent exchange of retaliation poses a threat to escalate the confrontation in the region. At $89.74 per barrel, Brent futures saw a $2.63, or 3%, increase. The most traded West Texas Intermediate contract in the US market increased by $2.56, or 3.1%, to $84.66 per barrel.

Israel attacked Iranian territory on Friday. Isafahan, in Iran, was the scene of many explosions, however, the reason was not immediately identified, according to Iran’s Fars News Agency. However, this caused other flights above Iranian airspace to be diverted. Concerns have been raised by the claims that Israel retaliated against Iran over its last weekend drone and missile attack.

In response to what appeared to be an Israeli raid on the compound housing its embassy in Syria, Iran deployed hundreds of drones and missiles last weekend. Investors have been closely observing Israel’s reaction to the April 13 Iranian drone attacks. The belief that international pressure would limit Israel’s response to Iran’s attack has caused the geopolitical risk premium in oil prices to unwind this week.

If these claims are confirmed, fears of a greater crisis will intensify, as will concerns that things are possibly moving closer to a situation in which oil supply challenges could result in actual supply interruptions.

Venezuela lost a critical US permit that allowed the OPEC member to ship oil to markets throughout the world. Following the nation’s drone attack on Israel the previous weekend, the US also imposed sanctions on Iran, another member of OPEC, targeting its drone program.

However, Iran’s oil sector is not included in the sanctions.