The effect of increasing tension between Iran and Israel was visible in the global oil market on Monday. Crude oil prices rose by more than 4% during Asian trading. Investors fear that the ongoing conflict in West Asia could affect global oil supply. The August futures price of Brent crude oil increased by 4.3% to around $ 97.33 per barrel. At the same time, the July futures of American West Texas Intermediate (WTI) were seen rising by 4.4% and trading at around $ 94.5 per barrel.
This rise in oil prices came when news came out that Iran had fired ballistic missiles on Tel Aviv. This has dealt a blow to the ceasefire signed in early April. After this, the fear increased in the market that there may be further delay in the normal operation of the strategically important Strait of Hormuz. This sea route is considered extremely important for about 20% of the world’s oil and energy trade. In such a situation, any kind of obstruction here can affect global supply and prices.
The market is not seeing any quick solution
Investors are still not convinced about the easing of tensions in the Middle East. According to reports, US President Donald Trump has asked Israeli Prime Minister Benjamin Netanyahu not to retaliate against Iran’s recent attack. In an interview, Trump indicated that America would take the final decision regarding any agreement with Iran. However, the market currently seems cautious about this diplomatic effort.
OPEC+ increased production, still no relief
Meanwhile, OPEC+, a group of oil producing countries, has decided to increase the production quota by 1.88 lakh barrels per day from July. This is the fourth consecutive time that the group has taken steps to increase production. However, market experts say that this will not completely remove supply related concerns. Many member countries are not able to reach their set production targets. Apart from this, America’s strong employment data has also supported oil prices.
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