Oil prices have climbed, but not dramatically so, even as the world braces for an all-out war in the most critical region on the planet for energy prices remain fairly subdued. However, some analysts predict oil hitting $100 dollars per barrel later this month, which would certainly be the surprise no one wanted!
Investors appear to have grown numb to the cascade of crises around the world which in the past has caused markets to overreact and then quickly fizzle out. This time they’re waiting for evidence of actual supply disruptions before bidding up the price of crude oil – a much more pragmatic approach. Yet experts warn there is still a real risk that the emerging regional war in the Middle East could cause a devastating surge in oil prices that rocks not just the world economy but perhaps the US presidential election, too. “This is going to get worse before it gets better. The story of the village boy who cried wolf did not end well for the village or the boy,” said Bob McNally, president of consulting firm Rapidan Energy Group.
“It’s hard to overstate how complacent the oil markets have become,” he said.
It’s also hard to overstate how much Americans despise price spikes at the gas pump.
“This is by far the world’s most important production and export region. It’s nothing less than the heart and circulation system of the global economy,” said McNally, who served as an energy adviser to former President George W. Bush
Oil prices climbed just 2.4% on Tuesday after Iran rained hundreds of missiles onto Israel. Prices rose only slightly on Wednesday even as Israel vowed to retaliate. It was not until Thursday, when President Joe Biden left open the door to Israel striking Iran’s oil reserves that markets reacted more strongly. Crude climbed nearly 5% to $73.50 a barrel Thursday afternoon.
Still, US oil prices remain much closer to their 2024 lows than their highs last fall of nearly $90.
The subdued reaction underscores lingering concerns about a supply glut, economic trouble in China and infighting within OPEC+, the oil cartel led by Saudi Arabia and Russia.
The extent of any future price rises will largely depend on the Israeli retaliation to the Iran missile attacks - therefore we all wait anxiously, however it is highly likely future price spikes over the coming weeks will be inevitable.
Fuel cards users can expect an increase in the region of .50 – 70ppl for next week.
