Israel-Iran war expands to energy — but not oil shipments
Add Axios as your preferred source to
see more of our stories on Google.
Israel struck energy targets including a large Iranian gas field and a refinery over the weekend but spared the country's oil export infrastructure.
The latest: What wasn't hit is holding sway over prices Monday.
- Crude prices are retaining much of last week's surge but aren't rising anew aside from a temporary spike when markets opened last night.
Why it matters: Obviously oil prices have ripple effects throughout the global economy, but their movements are also a bank shot look at how the market hive-mind sees risks.
- "The muted price movement today does not signal that the market has priced in an escalation toward the worst-case scenario for oil; a major disruption of supply," Janiv Shah, Rystad Energy's VP for commodity markets, said in a note.
What we're watching: Three big categories of energy-related escalation would send oil prices soaring:
- Israel hitting Iran's oil export facilities, notably the Kharg Island terminals.
- Iran striking regional oil producing infrastructure.
- Iran trying to impede the Strait of Hormuz, the transit point for roughly a fifth of the global oil trade.
- That last one is the "most important market-moving event to watch for" and could "tip oil markets into unprecedented territory," Rystad's Shah notes.
The bottom line: "If Tehran comes to feel its back against the wall, its last powerful card to play is threatening or causing a major disruption of Mideast Gulf oil exports," oil expert Clayton Seigle of the Center for Strategic and International Studies said via email.
- "OPEC spare capacity is nowhere near enough to offset a major loss of Gulf oil supply."
