Israel-Iran conflict threatens Middle East energy facilities... International oil prices surge

Israel’s bombing of Iran’s largest gas field and Iran’s retaliatory attacks have significantly impacted energy facilities in the Middle East, causing international oil prices to surge. This incident has led to unstable energy supplies and shaken global markets.

Brent crude oil futures for May delivery rose 3.8% from the previous trading day, closing at $107.38 per barrel. During trading, it briefly reached $109.95 per barrel. In contrast, U.S. West Texas Intermediate (WTI) saw only a slight increase, with the spread between WTI and Brent widening further.

The background of this event involves conflicts over energy infrastructure in the Middle East. Israel attacked Iran’s key natural gas facilities, including the South Pars gas field, marking the first such strike. In response, Iran launched missiles at Qatar’s natural gas facilities, a major energy supplier, causing fires at key energy sites.

Currently, the Strait of Hormuz is effectively blockaded. This strait accounts for 20% of global oil shipments by sea, and the blockade is severely disrupting supplies. Citibank predicts that if this situation persists, Brent oil prices could temporarily rise to $120 per barrel and average around $130 during the second and third quarters.

The surge in oil prices has put downward pressure on gold markets. As a safe-haven asset, gold prices declined on the day, mainly due to the Federal Reserve’s interest rate decision and the chain inflation pressures caused by instability in the Middle East, which suppressed gold prices. While demand for safe assets remains, inflation and interest rate volatility are diminishing gold’s appeal.

This rise in international oil prices and fall in gold prices have increased global economic uncertainty, and the duration of the Middle East conflict will be a key factor influencing future market volatility.