Oil prices soar after reports of a possible Israeli strike on Iran’s nuclear facilities

21 May 09:42

Oil prices rose sharply by more than 1% on Wednesday after reports that Israel is preparing to strike Iran’s nuclear facilities. This has raised concerns that the conflict could disrupt oil supplies from the key oil-producing region of the Middle East, "Komersant Ukrainian" reports citing Reuters.

According to OilPrice.com, futures for Brent crude for July delivery rose by $1.22, or 1.87%, to $66.60 per barrel as of 07:44 Kyiv time. At the same time, futures for US West Texas Intermediate (WTI) for July delivery fell 13 cents, or 0.21%, to $62.56.

Iran’s nuclear program

According to CNN, which cites several US officials familiar with the situation, new intelligence information obtained by the United States indicates that Israel is preparing to strike Iran’s nuclear facilities. However, according to these officials, it remains unclear whether Israeli leaders have made a final decision.

“Such an escalation would jeopardize not only Iran’s oil supplies, but would also have a significant impact on the entire region,”

– ING commodities analysts said on Wednesday.

Iran is the third-largest oil producer among the members of the Organization of the Petroleum Exporting Countries (OPEC), and an Israeli attack could disrupt supply flows from the country.

There are also fears that Iran could retaliate by blocking oil tankers from passing through the Strait of Hormuz, a strategically important narrow passage in the Persian Gulf through which Saudi Arabia, Kuwait, Iraq, and the United Arab Emirates export oil and fuel.

The United States and Iran have held several rounds of talks this year on Iran’s nuclear program. US President Donald Trump has renewed his campaign to tighten sanctions on Iranian oil exports to force Tehran to abandon its nuclear ambitions.

Despite the talks, statements by U.S. officials and Iran’s Supreme Leader Ayatollah Ali Khamenei on Tuesday indicate that the two sides remain far from resolving the issue.

“Indirect talks are underway between the US and Iran on the nuclear program, which, if successful, could provide additional benefits to the market. However, these talks seem to be losing momentum,”

– ING analysts said.

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Stocks in the US

At the same time, there are some signs of an improvement in oil supply. According to market sources, citing data from the American Petroleum Institute released on Tuesday, crude oil stocks in the United States increased last week, while gasoline and distillate stocks decreased.

Oil inventories in the United States, the world’s largest oil consumer, rose by 2.5 million barrels in the week ended May 16, the sources said on condition of anonymity.