Iran conflict worsens oil prices but is not a shock and will not trigger an oil crisis

ChainCatcher reports: Javier Blas, Bloomberg columnist and author on energy and commodities, wrote that the impact of Iran’s strikes on oil prices is negative but not disruptive. Blas’s article notes that markets are most concerned about whether either side will target energy infrastructure or force the closure of oil tanker routes—neither of which has occurred yet. Although there is concern that Iran might set fire to the Middle East’s energy industry by targeting oil fields, refineries, and export terminals, Tehran has not yet turned oil into a weapon. Likewise, Israel and the United States have not targeted Iran’s oil infrastructure. Analysts suggest oil prices will rise sharply, but even the most bullish traders are only discussing a potential price of $100 per barrel—far below the $139 per barrel peak following the 2022 Russia-Ukraine conflict and the all-time record of $147.50 per barrel in 2008. From this broader perspective, the Middle East is unlikely to trigger an oil shock. Moreover, while the physical oil market has remained weak, the financial oil market has been bullish, with traders rushing to buy oil in anticipation of higher prices. A year ago, the 12-day war between Israel and Iran caught many traders off guard, sparking a buying surge that sent crude prices soaring. This time, the number of bullish positions is among the highest in the past decade. As a result, oil traders are better prepared to absorb this crisis.