Israel’s promises to take revenge on Iran for the missile attack have driven up oil and gas prices. Contributing to this turn was US President Joe Biden, who would least like an increase in raw material prices on the eve of the presidential elections.
Oil
Over the course of a few days this week, oil prices rose sharply for the first time in a long time. The price of North Sea Brent rose 10% to $78.9 per barrel. The market is anxiously awaiting an Israeli retaliatory strike against Iran. president of the united states joe biden confirmed that oil facilities were also being considered, which was largely the trigger.
Israel could attack Iranian oil refineries or the main oil export terminal on Kharg Island to collapse the country’s oil revenues, according to analysts at JPM Commodities.
“However, this option is unlikely to be approved by the US administration, which will fear disruptions to oil markets in the weeks leading up to the presidential election,” – analysts told Reuters.
Iran’s production represents 3% of world production and exports are around 1.7 million barrels per day. And neighboring countries, such as Saudi Arabia and the United Arab Emirates, for example, cannot quickly compensate for the supply disruption. This won’t take weeks.
The market believes that an attack on Iran’s oil facilities could cause prices to rise by another $20 per barrel and that a price below $100 will last much longer.
Gas
A new round of confrontation in the Middle East has pushed European gas prices to a new high since December 2023. On the last trading day of the week, October 4, TTF hub fuel supplies for the next month they increased to 470 dollars per thousand cubic meters.
Iranian semi-official news agency SNN quotes deputy commander of the Revolutionary Guards Ali Fadavi reported that in the event of an Israeli retaliatory attack, Tehran would attack Israeli energy and gas facilities. This could cause a disruption to fuel production in the Mediterranean and supplies to Jordan and Egypt. This option will force the region to actively import LNG, which will affect prices in Europe.
In a normal market with healthy industrial indicators, the price of gas in Europe should be even higher: between $115 and $170, according to SEB. However, the EU economy, especially Germany’s, is weak.
“European heavy industry, hit by recent energy price shocks, is likely to reduce gas use for years to cope with a prolonged period of high costs and weak profits. The tightening of the situation on the gas market in 2025 is expected to lead to an increase in electricity bills. “This means that price-sensitive industries, such as ammonia production and processing, will have to reduce consumption.” The Energy Aspects analyst told Bloomberg Elisa Pasko.
Rising gas prices also pushed up coal prices, whose reserves are also high in Europe. But prices rose slightly. Coal supplies from the Antwerp-Rotterdam-Amsterdam (ARA) hub for next month rose from $116.5 per ton to $121.5.
