Global oil prices headed north on Tuesday as Middle East tensions surged interests with Iran reportedly preparing to launch a missile attack on Israel.
As of press time, Brent crude traded at $73.61 per barrel, up 4.2% (+$3.00) while the US West Texas Intermediate (WTI) crude was at $70.16 per barrel, up 4.5% (+$3.08).
Reports from U.S. officials suggest that an Iranian missile strike is imminent—the specter of which is driving uncertainty across global markets.
The possibility of an attack will heighten the risk of supply disruptions as conflict could further spread or target key infrastructure in oil-producing nations.
The development is happening due to recent Israeli military actions against Hezbollah in southern Lebanon.
Market analysts noted that the move has further heightened fears of a broader regional conflict since Iran has a significant influence on the region’s oil flows. This means an escalation in military activity has the potential to hinder exports, driving prices higher.
The world’s largest economy, the US has shown support for Israel’s defense and warned Iran of severe consequences if an attack is carried out.
According to Reuters, the Organisation of the Petroleum Exporting Countries and its allies known as OPEC+ is unlikely to recommend any changes to its current deal to reduce production and to start unwinding some cuts from December when it meets this week.
OPEC+ will hold an online joint ministerial monitoring committee (JMMC) meeting on Wednesday (October 2) at 1200 GMT (1pm Nigerian time).
OPEC+ is currently cutting output by a total of 5.86 million barrels per day, which represents about 5.7 percent of global demand, in a series of steps agreed since late 2022.
Its latest agreement calls for OPEC+ to raise output by 180,000 barrels per day in December, part of a plan to gradually unwind its most recent layer of voluntary cuts during 2025.
OPEC+ delayed the start of phasing out the output cuts, initially planned for this month but now the group expects to start bringing back supply to market in December, if the market conditions are more favourable.