Oil prices experienced an uptick on Thursday following a drone strike on a Saudi Aramco oilfield, which intensified apprehensions regarding the potential disruption of supplies due to the escalating conflict in West Asia. The attack also prompted the United States to instruct certain diplomats and their family members to depart from its missions in Saudi Arabia. Brent crude experienced an increase of 1.18%, reaching $110.18 per barrel, whereas US West Texas Intermediate crude was priced above $98 per barrel. Brent remained relatively stable on Wednesday, whereas WTI experienced a decline of 67 cents. On Wednesday, Yemen’s Iran-aligned Houthis launched attacks on multiple targets, resulting in the death of at least one individual and injuries to eight others at a civilian airport in Dammam. A separate drone attack on a Saudi oilfield resulted in the deaths of two individuals. Meanwhile, reports emerged of explosions occurring in Sirik, located in southern Iran, on Wednesday. Iranian media reported that the cause and origin of the explosions remain unidentified.
Iranian Foreign Minister Abbas Araqchi stated on Wednesday that Tehran was fully prepared to defend itself. President Masoud Pezeshkian stated to state media that the United States should not anticipate dialogue while it persists in blockading and threatening Iran. The source reported that the US and Israeli militaries have formulated detailed strategies for potential renewed strikes against Iran following the American midterm elections, according to US officials and others informed about the discussions. Preparations for a brief yet intensive operation are advancing, as both militaries enhance their exercises and conduct aircraft flights over Iraq to rehearse strike manoeuvres. US Defence Secretary Pete Hegseth met with Israeli Prime Minister Benjamin Netanyahu in Israel this week to discuss new military actions, as reported by US officials.
Potential targets encompass Iran’s energy infrastructure, nuclear facilities, and missile and drone arsenal. Some officials contend that a further significant wave of assaults might drive Iran’s economy to the edge, potentially forcing Tehran to consider diplomatic concessions after nearly eight months of ongoing conflict. Uncertainty regarding the trajectory of the conflict persists, casting a shadow over the forecast for oil prices. JPMorgan analysts indicated that the future course of the war continues to present significant challenges for modelling. At the outset of the conflict, the bank had anticipated that the US administration would refrain from surpassing specific economic thresholds. Seven months later, numerous thresholds had been surpassed, yet a definitive exit strategy continued to be unattainable.
The risk of further supply disruptions has also bolstered expectations of elevated oil prices. Daan Struyven stated that recent attacks have highlighted the potential for shipping disruptions to proliferate and escalate. Goldman Sachs has delineated a scenario where oil prices may ascend to $120 a barrel should hostilities against vessels in the Middle East intensify. Conversely, a return to normal export levels could lead to a decline in prices toward $80 a barrel. Struyven indicated that shipping risks have emerged as a crucial element affecting oil prices, noting that the bank perceives considerable upside potential for crude. Goldman Sachs anticipates an uptick in natural gas and refined fuel prices, noting that supply shocks are likely to exert a more significant influence on gas and refined products compared to crude oil.
