Middle East Tensions Raise Oil Prices: Tensions Between Israel and Iran Cause a Rise in Crude Oil

Rising tensions in the Middle East are causing increased volatility in oil markets around the world. WTI crude oil futures rose to $86 per barrel last Friday, largely recovering losses from the previous session.

This rise comes amid concerns that a potential conflict between Israel and Iran could lead to disruptions in oil supply.

Israel-Iran Tensions at Critical Level

Israel has announced that it expects an attack from Iran in the next 24 to 48 hours. The announcement is notable for its timing, with Iran vowing to retaliate for suspected attacks on the Israeli embassy in Syria.

Ceasefire talks between Israel and Hamas on the war in Gaza also failed. Israeli Prime Minister Benjamin Netanyahu stated that the clashes will continue and that they will take steps that could further destabilize regional stability.

Volatility Increases in Oil Markets

Such political tensions have a direct impact on global oil supply. The Middle East provides a significant portion of the world’s oil supply. Any supply disruption could cause price volatility in global energy markets. In addition, strong US inflation data is weighing on the energy demand outlook, reducing the likelihood that the Federal Reserve will cut interest rates.

The inflation data released in the US caused market jitters. High inflation rates make it difficult for the Federal Reserve to cut policy rates. This may lead to an increase in the value of the US dollar and thus to a rise in the dollar-denominated cost of energy products, including oil.

European Central Bank’s Interest Rate Policy

On the other hand, policymakers in Europe decided to keep the policy rate unchanged on Thursday. However, market analysts think that the bank is ready to cut rates soon depending on economic growth and inflation data. Such a move could boost demand for energy, including oil, in Europe.

Looking Ahead: What Do Energy Markets Expect?

Future developments in the current political situation in the Middle East, especially potential military conflicts between Iran and Israel, increase uncertainties for oil markets. Any supply disruptions in the energy markets could lead to global economic volatility, especially as energy demand in the West increases during the winter months.

These recent fluctuations in oil prices are forcing investors and policymakers to remain vigilant and be prepared for all possible scenarios. While instability in the Middle East directly threatens global energy supply, this situation will play a decisive role in how oil prices will be shaped in the coming period.

In the near term, oil markets and energy policies are expected to be shaped by political and military developments in the Middle East. This is both a risk for the global economy and an important consideration for policymakers.

Investors and energy market analysts are closely following developments in the region and developing strategies against any possible scenario. These strategies will be among the main factors that will determine oil prices in the coming period.