Iran Attack on Israel Will Not Cause Long-Term Disruption in Oil Supply, UBS Analysts Say
Amidst escalating tensions in the Middle East due to Iran's aerial attack on Israel, experts from UBS have reassured investors that there will not be sustained interruptions in energy flows from the oil-rich region. However, the long-standing regional conflict has historically led to market volatility as concerns over oil supply constraints linger.
Iran has declared that its military strike on Israel is over but has warned of resuming the attack if provoked further. On the other hand, Israel may respond significantly in the coming days, potentially targeting Iran's oil output facilities and strategic sites. This exchange of threats has raised concerns globally.
The UBS analysts believe that the situation is unlikely to escalate into a full-scale war between Israel and Iran and their allies. However, they caution that if a broader conflict does erupt, disruptions in oil supply routes through the critical Strait of Hormuz or damage to key oil infrastructure could push prices above $100 per barrel for an extended period.
In response to the recent events, oil prices have surged, with the Brent contract rising 2.6% to $75.50 per barrel and US crude futures (WTI) trading 2.8% higher at $71.80 per barrel. The market remains volatile as investors closely monitor developments in the region.
In conclusion, while the immediate impact of the Iran-Israel conflict on oil supply may be limited, the potential for heightened volatility and price spikes remains. It is essential for investors to stay informed and prepared for any further escalation in tensions that could impact global energy markets and their financial portfolios.