Oil Prices Surge 4% After Iran’s Missile Attack on Israel

Oil prices spiked by about 4% on Tuesday following Iran’s launch of ballistic missiles at Israel in retaliation for Israel’s ongoing military operations against Tehran’s Hezbollah allies in Lebanon. Explosions were heard across Israel, including in Jerusalem and the Jordan River Valley, prompting alarms and forcing residents into bomb shelters.

Brent crude futures rose by $2.51 (3.5%) to $74.21 per barrel, while U.S. West Texas Intermediate (WTI) crude increased by $2.41 (3.5%) to $70.58 per barrel.

Political risk strategist Clay Seigle warned that Israel could expand its military offensive to target Iranian oil assets, potentially disrupting more than a million barrels per day of oil production or exports.

In addition, Iran-backed Houthi rebels in Yemen claimed responsibility for attacking vessels near the port of Hodeidah, escalating concerns about the impact on oil supplies, particularly if Iran’s proxies target oil producers like Saudi Arabia.

Before news of the missile attack, oil markets had been trading lower due to expectations of increased global supplies and slower demand growth. OPEC+ ministers are scheduled to meet on October 2 to review the market, with no major policy changes anticipated.