Market worries that US-Iran tension has potential to hit production in the Middle East
The Philadelphia Energy Solutions oil refinery. Picture: REUTERS
Prices surged during the previous two sessions, with Brent reaching its highest since September, while WTI rose to the most since April. The gains followed fears of escalating conflict and potential Middle East supply disruptions after the January 3 drone strike in Baghdad that killed Iran’s Qassem Soleimani. But some analysts have tempered expectations for a widespread conflict.
Iran would need foreign currency earnings from continued oil exports and it would be counter to its interest if it tried to block the Straits of Hormuz, he said. About 20% of the world’s oil passes the Middle East waterway, which borders Iran. Prices were also supported by higher compliance among the Organisation of the Petroleum Exporting Countries on meeting production quota curbs aimed at reducing supply.
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