Will oil surge past $100? Fallout from US attack on Iran explained
Illustrative photo: Analysts assess risks after the US strike on Iran (Getty Images)
A US strike on Iran's nuclear facilities could shake up global markets. It is possible that the price of oil could jump to $100, reports Reuters.
Most markets did not have time to react to the US strikes on Iran's nuclear facilities, as they were closed on weekends. The only reaction was the cryptocurrency market. Ether fell by more than 5% and bitcoin by 1%.
Potomac River Capital CIO Mark Spindel believes that the markets will initially be alarmed and gripped by uncertainty, “as now Americans everywhere are going to be exposed.”
“TOil is sure to spike on this initial news, but will likely level in a few days. With this demonstration of force and total annihilation of its nuclear capabilities, they’ve lost all of their leverage and will likely hit the escape button to a peace deal,” said Jamie Cox, managing partner of Harris Financial Group.
Oil price
Analysts also believe that the biggest risk after the US strike on Iran remains the possibility of blocking the Strait of Hormuz. About 20% of the world's oil is exported through it. If Iran takes this step, the situation in the global economy could be significantly shaken.
“Much depends on how Iran responds in the coming hours and days, but this could set us on a path towards $100 oil if Iran responds as they have previously threatened to,” said Saul Kavonic, senior energy analyst at MST Marquee.
The chief investment officer of F/M Investments expects the price of crude oil to jump to $80 or higher when trade resumes.
According to analysts, the consequences of an attack on Iran will also affect Asia, as the key vulnerability for Asian markets is their sensitivity to higher energy prices.
According to a representative of Eastspring Investments, a prolonged conflict increases the risk of supply disruptions, which could lead to inflationary pressures and negatively affect growth across the region.
US strike on Iran
On June 22, US President Donald Trump announced that the US military had attacked three nuclear facilities in Iran - Fordow, Natanz, and Isfahan. Earlier, Israel attacked these facilities on the night of June 13.
Trump also threatens Iran with new strikes and calls for avoiding escalation.
Iran, in turn, has already launched a missile strike against Israel. Almost 90 people were injured in Tel Aviv, and the city suffered serious damage.
The United States, according to NBC News, expects Tehran to try to retaliate within 48 hours. The IAEA convenes an emergency meeting after the strikes on Iran. The EU will discuss the situation at the ministerial level tomorrow, June 23.
