Source: NY Times
The rise in oil prices turned into a stampede on Friday, June 6, with futures jumping a staggering $11 a barrel to set a record above $138 a barrel. The unprecedented surge came as the dollar fell sharply against the euro and a senior Israeli politician once again raised the possibility of an attack against Iran.
Even as uncertainties abound about the fundamentals of the energy market, geopolitical tensions in the Middle East regained center stage after Israels transportation minister and a deputy prime minister, Shaul Mofaz, said Friday that an attack on Irans nuclear sites looked unavoidable if Iran did not abandon its nuclear program.
Iran is the second-largest oil producer within the OPEC cartel and exports nearly two million barrels a day. Because the world has few supplies to spare, any interruptions in Irans exports could push prices to higher levels. The world currently has about three million barrels a day of spare capacity, and consumes 86 million barrels a day of oil.
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. The comments bring home the point that the dispute over Irans nuclear program remains unresolved and that the risks of military confrontation are indeed increasing.