As Israel War Rages, Oil Traders Are Focused on Iran

 Crude traders don’t expect a massive price surge as there’s no immediate threat to supply. But all eyes are on Iran, a major oil producer and key backer of the Hamas group that launched this weekend’s offensive on Israel.

A retaliatory strike against the Islamic Republic would inflame fears over the Strait of Hormuz, the vital shipping artery which Tehran has previously threatened to shutter. There’s also the prospect of the US cracking down again on a resurgent flow of Iranian oil exports.

The “oil-disruption scenario,” according to Bob McNally, president of Rapidan Energy Group and a former White House official, “would be if conflict spread to Iran.” For now, that looks unlikely, he said.

But the threat has escalated just as global crude supplies have been depleted by months of sharp production cutbacks by Saudi Arabia and Russia, which last month briefly pushed Brent futures to almost $100 a barrel.

“It is unlikely to impact oil supply in the short term,” said hedge fund trader Pierre Andurand, founder of Andurand Capital Management LLP. “But it could eventually have an impact on supply and prices.”

The onslaught comes almost exactly 50 years after the Arab oil embargo, when Saudi Arabia and other OPEC producers choked off flows to the west in the wake of the 1973 Yom Kippur War.

No-one expects Riyadh — which has been negotiating with Washington over normalizing relations with Israel — to turn off the taps in solidarity with the Palestinians now. At worst, the conflict may derail the normalization talks and scupper any additional Saudi oil flows that may have resulted.

https://finance.yahoo.com/news/israel-war-rages-oil-traders-095536214.html