The price of oil ended higher on Friday, due to the risks of American strikes in Iran, raising concerns about escalation in the region and disruption of global crude supply. The price of the Brent barrel from the North Sea, for delivery in April, rose by 2.45% to $72.48. Its American equivalent, the West Texas Intermediate barrel, for delivery in the same month, increased by 2.78% to $67.02.
Prices have reached levels unseen in about six months. “The persistent risk of an American military strike” in Iran remains “the main concern in the oil market,” summarizes Carsten Fritsch, an analyst at Commerzbank.
Donald Trump said Friday that he was “not very happy” with the ongoing negotiations with Tehran on the Iranian nuclear issue. He also stated that he had not made a “final decision” on possible American strikes. Iranian Foreign Minister Abbas Araghchi warned the United States on Friday against “any excessive demands” in their discussions, dampening optimism following a new round of talks in Geneva.
These talks mediated by Oman were seen as one of the last chances to avoid war, as the United States deployed its largest military presence in the Middle East in decades. Washington dispatched two aircraft carriers to the region, including the Gerald Ford, the world’s largest, expected off Israel after leaving Crete on Thursday.
“In case of an American attack on Iran, Brent prices could increase by up to $10,” said Gregory Brew of Eurasia Group. Iran is a significant oil producer and the country borders the Strait of Hormuz, through which more than 20% of the world’s production transits. “The impact on prices and its duration will depend on the extent of measures taken by the United States and Iran’s retaliation,” Brew added.
The tensions between the two enemy countries almost overshadow the meeting scheduled for Sunday between eight members of the Organization of Petroleum Exporting Countries and its allies (OPEC+). “OPEC+ is only expected to slightly increase its oil production starting in April,” Fritsch noted. Operators anticipate an increase in quotas of 137,000 barrels per day. “But geopolitical risks make it unlikely that prices will come under downward pressure, at least for now,” the analyst concluded.
