Middle East tensions: Oil prices at risk of further increases

Crude oil prices soared nearly 9% last week, marking the biggest weekly gain since March 2023, following a significant escalation in Middle Eastern conflicts.

Some analysts believe that OPEC+ spare capacity and US production could offset any immediate supply shocks. However, a broader regional conflict in the Middle East could lead to long-term disruptions in the oil markets.

In early trading on Monday's Asian session, oil prices saw a slight retreat, with Brent futures on the ICE falling by 0.35% to $77.78 per barrel, while WTI futures on the Nymex slipped 0.23% to $74.21 per barrel at 6:24 am CET.

On Tuesday last week, Axios reported that Israeli officials stated that Israel would target Iran's oil production facilities within Iran and other strategic sites in response to Iran's ballistic missile attack.

On Saturday, Israel reaffirmed its intent to retaliate "when the time is right", although US President Joe Biden told reporters that Israeli officials had not yet decided how to respond.

On Sunday, Iran's state news agency Shana reported that Oil Minister Mohsen Paknejad visited the Kharg Island oil export terminal, where 90% of Iranian oil exports are shipped.

Paknejad stated on national television: "We are not afraid that our enemies will ignite a crisis, and visiting the region is a normal business trip."

He also met with the Revolutionary Guards Navy commander, emphasising the Navy's crucial role in securing oil and gas facilities.

Iran is one of the top 10 oil producers globally, with production exceeding 3.3m barrels per day in August - the highest in five years, according to the Organisation of the Petroleum Exporting Countries (OPEC).

Iran's oil exports have also climbed to a multi-year high of 1.7 million barrels