Crude oil rises on heightened tensions after Iranian missile attack By Investing.com

Investing.com — Oil prices rose on Wednesday, adding to the previous session’s sharp gains after Iran launched a missile attack on Israel, escalating tensions and potentially disrupting crude output in the volatile region.

By 04:35 ET (0835 GMT), futures were trading 2.1 percent higher at $71.27 a barrel, and the contract was up 1.7 percent at $74.97 a barrel. barrel.

Condemnation rages after Iranian missile attack on Israel

Both benchmarks posted gains of more than 5 percent on Tuesday following Iran’s biggest-ever military strike against Israel in retaliation for the recent killing of Iran-backed Hezbollah leader Hassan Nasrallah and Israel’s deployment of ground forces in southern Lebanon.

Iran said its attack was over, barring further provocation, but Israel vowed the move would be met with “vast destruction”, potentially drawing its backer the United States into turmoil.

“So far, many market participants have played down the risk of physical supply disruptions stemming from the nearly year-long conflict, while Iranian exports rose to 1.7MB/d, near a six-year high.” analysts at RBC Capital Markets said in a note.

“Iran has so far avoided a repeat of the 2019 attacks on regional energy infrastructure,” RBC added. However, “Iran and its proxies could target energy operations elsewhere in the region to internationalize the costs if the current crisis turns into an all-out war.”

In addition, Israel could choose to move away from its traditional response of targeting military infrastructure.

“A significant escalation would likely involve targeting Iran’s nuclear facilities and energy infrastructure, which would likely increase the risk premium in the oil market,” analysts at ING said in a note.

OPEC+ is unlikely to change production

Members of the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, will meet later in the session to review the market.

The group is set to increase production by 180,000 barrels per day each month starting in December, so little change is expected at this meeting.

“Given that several OPEC+ members had previously agreed to continue with further voluntary cuts until the end of November, we do not expect the committee to recommend any changes to production policy,” ING added.

US crude oil inventories fall – API

U.S. crude oil inventories fell by about 1.46 million barrels in the week ended Sept. 27, data from the , released on Tuesday, compared with a draw of 4.3 million barrels in the previous week.

Economists had expected a decline of about 2.1 million barrels.

Gasoline stocks rose by about 909,000 barrels, while distillate stocks — the fuel class that includes diesel and — fell by 2.67 million barrels.

The government inventory report is presented later in the session.