New Delhi: After more than a year since the direct military confrontation between Israel and Iran, both countries have resumed missile and drone strikes after Israel launched extensive drone and missile strikes targeting Iranian nuclear facilities and high-ranking officials. This latest round of tensions in the volatile Middle East has raised fears of oil supply disruptions, with brent crude oil futures rising 7.02% after the news broke out on June 12.
The attacks were not targeted at Iran’s oil refining and storage facilities, with the National Iranian Oil Refining and Distribution Company saying that its facilities are operational, as per a Reuter’s report.
As a member of the Oil Producing and Exporting Countries (OPEC), Iran produces 3.3 million barrels per day (bpd) and exports 2 million barrels per day of oil and fuel. This conflict has triggered fears of oil disruptions, especially as Iran controls the Strait of Hormuz, a critical chokepoint for global oil shipments.
Despite this, experts don’t think this skirmish will affect oil prices as they have during the Oil crises of the 1970s, when supplies were disrupted due to conflicts in the Middle East.
According to Commodity expert Javier Blas, there is an abundant supply of oil in the market and the Russian invasion of Ukraine and other skirmishes haven’t affected the supply of oil in the markets.
“every oil-price rally has proven to be an opportunity to sell. It required nerves of steel, but shorting crude while bombs and the missiles were flying was the winning trade,” he explains in a LinkedIn post.
Even though earlier geopolitical events haven’t significantly disrupted supply, there is still a fear of oil disruptions, even though OPEC has boosted oil production faster than previously expected.
