The escalation in the Middle East, the Iranian missile attack on Israel on Tuesday and Israel’s possible response boosted oil prices, which rose almost 9% in four sessions. On Friday, October 4, a barrel of North Sea Brent closed the day at just over 78 dollars (about 71 euros). Similar trend for a barrel of West Texas Intermediate, in the United States, now at more than 74 dollars.
On Thursday, questioned about possible Israeli attacks on Iranian oil facilities and possible support from the United States, US President Joe Biden, quoted by Agence France-Presse, responded that he was “under discussion” about this. Before adding, the next day, that Israel would do better in“ [envisager] other options.”
The rise in prices reflects the importance of the Islamic Republic in the black gold market. In the event of proven offensives against its oil infrastructure, international prices should be expected to rise up to “10 dollars extra”anticipates analyst Ann-Louise Hittle, from the consulting firm Wood Mackenzie. Enough to find the price of Brent at the same level as in April.
China, “main client”
“An attack on the export terminals would have a great impact, more than on the refineries that supply gasoline to the Iranian market”estimates Giovanni Staunovo, commodities analyst at the Swiss banking group UBS.
Iran pumped 3.4 million barrels of crude oil per day in August, according to the latest reading from the International Energy Agency (IEA). It ranked seventh in the world in 2023, with almost 5% of all crude oil and condensate supply, according to figures from the Energy Institute. Its proven crude oil reserves are also among the largest, on the order of 200 billion barrels, on a declared basis.
Discounting domestic consumption (86 million inhabitants), approximately half of Iranian production is destined for export. China, the world’s largest oil importer, is “the main client”Staunovo emphasizes.
These exports challenge the US embargo in force since 2018, a measure decreed at the initiative of Donald Trump, based on the Iranian nuclear program. Because Tehran manages to evade sanctions. Especially in recent months, even if that means selling their products cheaper, aboard “ghost” ships. Iran thus increased its extraction by 450,000 barrels per day during 2023, according to the IEA, which made it the “Second source of supply growth after the United States.” And there would still be room: before the sanctions, the National Iranian Oil Company could extract almost 4 million barrels a day.
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