Oil Prices Skyrocket
‘Oil prices had their biggest-ever jump on Friday, after a senior Israeli politician raised the specter of an attack on Iran and the dollar fell against the euro,’ the New York Times reports. ‘The gains on Friday capped a second day of strong gains on energy markets, and fueled suspicions that commodities might be caught in a speculative bubble.’
Oil futures surged more than $10, or almost 8 percent, to $138 a barrel, in afternoon trading on the New York Mercantile Exchange. Friday’s rise followed a 5.5 percent jump on Thursday.
Even as uncertainties abound about the fundamentals of the market, geopolitical tensions in the Middle East regained center stage after Israel’s transportation minister, Shaul Mofaz, said Friday that an attack on Iran’s nuclear sites looked “unavoidable.” Iran is the second-largest oil producer within the OPEC cartel and any interruptions in its exports could push prices higher levels.
“The return of the Iranian risk premium calls for a careful assessment of the potential oil supply impact of military strikes on Iran,” said Antoine Halff, an analyst at Newedge, an energy broker.
Some experts have already predicted that the price of oil will rise to $200 a barrel next year. This seemed impossible once, only five years ago, and even two or three years ago, but not any longer.
If Israel acts against Iran, the price of oil will rise even further, and in a very short amount of time. If this happens, the prices will not go down for quite a while either because it will create a whole lot of tension in the region.
