Brent crude briefly jumped above US$77 a barrel today after a flare-up of tensions in the Middle East and an exchange of strikes between Iranian forces in Syria and the Israeli army. According to Israeli sources, Iranians attacked Israeli positions in the Golan Heights with rockets, which prompted an immediate reaction.
The Israeli forces carried out a string of air strikes against “dozens” of Iranian targets in Syria following the rocket attack, itself a retaliation for Israeli strikes against Iranian positions in Syria last month, in which seven Iranian Revolutionary guards were killed.
As a result of this sudden spike in aggression, oil prices, already rattled more than enough by President Trump’s withdrawal from the Joint Comprehensive Plan of Action, commonly called the Iran nuclear deal, continued their climb upwards, as the danger of a direct war between Israel and Iran, which PM Benjamin Netanyahu recently suggested might happen sooner rather than later, increased.
In early morning trading, West Texas Intermediate was changing hands for US$71.66 a barrel, with Brent trading at US$77.72. But even fears of oil shortages caused by Iranian sanctions could not keep prices high.
By 10:20am EST, both the WTI and Brent benchmarks began to slide, trading down on the day. WTI was trading at $70.82, with Brent at $76.75. Related: Goldman: Oil Prices To Hit $82.50 By The Summer
This full effect of the U.S. withdrawal from the Iran nuclear deal is unlikely to be felt for another six months—this is the deadline for companies operating in Iran to wind down their business there. At the same time, events in Syria, Israel, and Iran will continue to be watched closely for any suggestions about where the region is going.
Interestingly enough, Israel is staying cozy with Iran’s biggest backer in the Middle East, Russia. The Israeli PM was a guest of President Vladimir Putin at the Victory Day parade in Moscow on May 9. This might signal that there is still space for reducing the tension between Tel-Aviv and Tehran.
By Irina Slav for Oilprice.com
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