Oil markets have endured a turbulent week since Iran and Israel’s decades-long shadow conflict escalated into open warfare on 13 June. The psychodrama around whether or not President Donald Trump was preparing to bring the US into the conflict added to the volatility through much of the week, but his decision on 19 June to hold off for two weeks lowered the risk of a regional spillover (MEES, 20 June).
Oil prices retreated on Mr Trump’s statement. Brent crude had settled at $78.85/B prior to this, but has since dropped back to $77/B as MEES went to press. There remains a considerable risk premium amid concerns that the Israel-Iran conflict could expand to take in oil infrastructure. Even after the latest price declines, Brent remains well above pre-conflict levels of $69/B. Israel’s 14 June strike against Iranian gas facilities (MEES, 20 June) and Iran’s own response against the 197,000 b/d Bazan refinery at Haifa (MEES, 20 June) show that energy targets are not entirely safe. (CONTINUED - 895 WORDS)
