Oil prices set to swing next week amid US-Israel attack
Oil markets, which were closed over the weekend, are set to see price fluctuations next week as the impact of US and Israeli attacks on oil supplies from the Middle East remains uncertain.
Scenarios before the latest conflict with Iran predicted that a rapid price increase would disappear if the attacks did not affect oil transportation and infrastructure such as Iranian pipelines and the Kharg island terminal.
However, if the oil infrastructure or supply is interrupted due to the interruption of tanker traffic in the Strait of Hormuz, there will be a larger price increase and its effect will be longer-lasting.
Oil prices have already risen due to war fears.
International benchmark Brent crude closed at a seven-month high of US$72.87 ($A102.56) on Friday.
Iran exports about 1.6 million barrels of oil a day, much of it going to China, where privately owned refineries are less concerned about U.S. sanctions that prevent Iran from selling its oil elsewhere.
If this supply is disrupted, Chinese customers will look elsewhere for oil on the global market, potentially causing prices to rise.
Another question is about the Strait of Hormuz, through which 20 percent of global oil supply passes every day.
Middle Eastern exporters Saudi Arabia, Iraq and the United Arab Emirates send most of their exports through the strait.
But analysts say Iran has no incentive to try to close the strait because it would cut off its own exports and hurt China, its only major customer.
According to Rystad Energy, in a pre-war scenario, limited attacks on Iran’s nuclear program and the Revolutionary Guard that prevent regime change or all-out war could cause prices to rise by $5 to $10 ($A7 to $A14) based on fear alone.
A wider war, in which Iran disrupts tanker traffic, could see crude oil prices exceed US$90 per barrel ($A127) and US gas prices “well above” US$3 per gallon ($A4.2), according to another pre-war scenario by Clayton Seigle of the Center for Strategic and International Studies.
US gasoline prices averaged $2.98 ($A4.19) per gallon last week, according to US auto club AAA.
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