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Business News/ Markets / Commodities/  Oil prices subdued, energy security concerns escalate on West Asia tensions
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Oil prices subdued, energy security concerns escalate on West Asia tensions

The IEA has said that mounting tensions in region raise the risk of increased volatility in oil markets, and provide a fresh reminder of the importance of oil security

Global Oil prices had risen on Friday in anticipation of Iran's retaliatory attack, touching their highest levels since October. (File Photo: Reuters)Premium
Global Oil prices had risen on Friday in anticipation of Iran's retaliatory attack, touching their highest levels since October. (File Photo: Reuters)

Global crude oil prices ticked lower on Monday as traders assessed the extent of damage and associated risks following Iran’s attack on Israel's military facilities. 

Iran launched a barrage of missiles and drones at Israeli military facilities over the weekend, fuelling fears of a wider conflict in the volatile region. The attack, which Iran called retaliation for an air strike on its Damascus consulate, caused only modest damage, Reuters reported.

Israel is at war with Iran-backed Hamas in Gaza.

The International Energy Agency (IEA) on Monday said that mounting tensions in region raise the risk of increased volatility in oil markets, and provide a fresh reminder of the importance of oil security.

At 0956 am, the Brent June contract on the Intercontinental Exchange (ICE) traded at $90.31, down 0.15% from previous close. The May contract of West Texas Intermediate (WTI) fell 0.26% to $85.44 a barrel.

Oil prices had risen on Friday in anticipation of Iran's retaliatory attack, touching their highest levels since October.

"Crude oil showed very high price volatility and recovered from their lows amid geopolitical tensions. However, higher US crude oil stocks and strength in the dollar index limits gains of crude oil…If tensions further escalate in the Middle East, (they) could certainly disturb global supply conditions and oil prices could boil once again. We expect crude oil prices to remain volatile in today’s session," said Rahul Kalantri, vice president for commodities at Mehta Equities .

Brent crude had breached the $90-a-barrel mark earlier this month, reaching its highest level since October 2023 amid heightened tensions between Israel and Iran.

Iran currently produces over 3 million barrels per day of crude oil as the fourth-largest producer within the Organization of the Petroleum Exporting Countries (Opec).

"The sustained output curbs by Opec+ mean that non-Opec+ producers, led by the Americas, are expected to continue driving world oil supply growth through 2025. Additional volumes from the United States, Brazil, Guyana and Canada alone could come close to meeting world oil demand growth for this year and next," IEA said in its newsletter on Monday.

According to Moody's Analytics, oil prices may add another $5 per barrel taking the prices up to $95 per barrel.

"Now that the attack has happened, we expect oil prices to add another $5 per barrel to the risk premium, pushing oil to the $90 to $95 per barrel range," it said. Moody's noted that going ahead, there may be a measured and restrained response from Israel that de-escalates tensions, in line with pressure from the US and the wider global community, leading to a $10 per barrel risk premium fade over the next few weeks.

The other possibility, it said, would be a further escalation in the conflict if Israel forcefully responds to the attack, leading to prices breach $100 a barrel.

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Published: 15 Apr 2024, 10:29 AM IST
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