Oil markets around the world are preparing for possible turbulence as geopolitical tensions between the US and Iran increase the likelihood of a dramatic price spike. Analysts warn that if the impasse turns from rhetoric to concrete action, crude prices could rise by as much as $15 per barrel.
In the face of growing uncertainty, Brent crude and West Texas Intermediate have already started to rise. Brent recently traded above $71 a barrel, while US oil was trading close to $66, the highest levels since last summer. As traders balance the likelihood of a military escalation against ongoing diplomatic efforts to secure a new agreement over Iran’s nuclear program, prices have increased significantly in recent weeks.
Although market analysts caution that any disruption to production or supply lines might lead to a quick and major surge, they say the current pricing indicates cautious optimism that tensions will remain limited. In light of the geopolitical environment, markets seem unusually quiet, according to Daniela Hathorn, senior market analyst at Capital Economics. This subdued reaction implies that investors are either certain that any disagreement will be resolved quickly or wary about an impending escalation.
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