Oil prices climbed for a third straight day as market concerns over supply risks in the Middle East grew, following Israel’s warning of potential retaliatory strikes on Iran after Tehran launched a missile barrage earlier this week.
West Texas Intermediate (WTI) crude approached $71 per barrel after rising nearly 3% in the previous two sessions, while Brent closed just under $74 per barrel. Israel has vowed retaliation, though US President Joe Biden has advised against attacking Iran’s nuclear facilities.
The ongoing conflict between Israel and Iran, including their regional proxies in Gaza, Lebanon, and Yemen, has captivated the global oil market. With the Middle East responsible for around a third of the world’s oil supply, traders are anxious that the escalation could disrupt energy production or block critical supply routes.
Citigroup Inc. analysts estimated that a major Israeli strike on Iran’s oil-exporting infrastructure could remove 1.5 million barrels of daily supply from the market. A more targeted strike on smaller facilities could reduce output by 300,000 to 450,000 barrels.
Despite these tensions, there are signs of sufficient global supply. OPEC+ plans to restore some of its paused capacity starting in December, following a two-month delay. Additionally, US crude inventories saw an unexpected rise of 3.9 million barrels last week, marking the largest increase in five months, according to official data.
