Market Concerns about Disrupted Supply, Oil Prices Rise Again

The impact of the Iran-Israel conflict is fundamental on world oil supply and demand.

AFP/ROBYN BECK

Protesters unfurled a banner with the words "No War Against Iran" during a rally calling for a permanent ceasefire in the Israel-Hamas conflict in Los Angeles, California, United States on Monday (15/4/2024).

JAKARTA, KOMPAS  — Israel's alleged retaliatory attack on Iran on Friday (19/4/2024) caused the global crude oil price to rise to 89 US dollars per barrel. Quoting Bloomberg, the increase was influenced by market concerns about potential disruption to oil supplies due to increasing geopolitical tensions in the Middle East. On Thursday (18/4/2024), the price of Brent crude oil was at the level of 86 US dollars per barrel.

Previously, crude oil prices reached 90.45 US dollars per barrel on Friday (12/4/2024) last week. The increase was triggered by news of Iran's intention to attack Israel. The attack was carried out a day later on Saturday (13/4/2024). Several days after the attack, oil prices declined to 86 US dollars per barrel.

According to Warren Patterson, the Head of Commodity Strategy at ING Groep NV in Singapore, the market may need to start setting prices with greater risk premiums. "We are getting closer to the scenario where supply risks become a reality," he said, as reported by Bloomberg.

Also read: Israel Allegedly Responding to Iran, JCI Almost Touches 7,000

KOMPAS/PRIYOMBODO (PRI)

The list of fuel prices at gas stations in the Pesanggrahan area of South Jakarta on Wednesday (17/1/2024). In 2024, the Ministry of Energy and Mineral Resources raised the subsidy value to Rp 186.9 trillion, an increase of 28.6 percent.

Last week, regarding the increase in oil prices following Iran's plans to attack Israel, lecturer at the Faculty of Earth Technology and Energy Trisakti University, Jakarta, Pri Agung Rakhmanto< /a>, stated that the impact of the Iran-Israel conflict was fundamental on world oil supply and demand. Thus, its elasticity to increases in world oil prices is greater than the Russia-Ukraine and Israel-Hamas wars.

It is said to have a fundamental impact because on one hand, Iran is one of the dominant members of the Organization of the Petroleum Exporting Countries (OPEC). This position can influence OPEC's crude oil production quotas and pricing policies. Quoting OPEC's website, Iran has proven oil reserves of 208.6 billion barrels and a daily production of 2.5 million barrels.

On the other hand, Israel is a US ally that is both the largest producer and consumer of oil in the world. "So, the Iran-Israel conflict directly relates to the fundamental supply and demand of world oil," said Pri Agung.

Also read: World Oil Prices Towards a New Balance