Analysts from UBS predict that escalating tensions in the Middle East, sparked by an aerial attack on Israel by Iran, will not lead to sustained interruptions in energy flows out of the oil-rich region.
In a note to clients, the analysts highlighted that while the conflict has historically caused market volatility, they do not foresee significant disruptions in energy supplies.
Iran has declared that its military attack on Israel is over, but has issued a warning of further action in response to provocations. Israel, on the other hand, is preparing for a potential significant response that may target key oil facilities in Iran.
Israeli Prime Minister Benjamin Netanyahu has vowed retaliation for Tehran’s airstrikes, stating that Iran “will pay for it.” The US has also promised severe consequences for Iran’s actions and has reiterated its commitment to defending its interests in the region.
The UBS analysts believe that while the situation may worsen, they do not anticipate a full-scale war between Israel and Iran and their allies. However, they caution that any escalation could lead to disruptions in oil supply routes and push prices above $100 per barrel.
Oil prices have already risen in response to the tensions, with the Brent contract reaching $75.50 per barrel and US crude futures trading at $71.80 per barrel.
Analysis:
The recent escalation of tensions in the Middle East, particularly between Iran and Israel, has raised concerns about potential disruptions in energy supplies and the impact on oil prices. While analysts believe that a full-scale war is unlikely, any further escalation could lead to increased volatility in the oil market.
Investors should closely monitor the situation and be prepared for potential price fluctuations in the coming days. Any significant developments could have wide-reaching implications for global energy markets and may impact investment portfolios. It is important to stay informed and consider diversifying investments to mitigate risks associated with geopolitical uncertainties.