Commodities Review Podcast Podcast

Oil markets at a time of escalation between Iran and the United States

What are the consequences of the escalation between Iran and the United States on the oil markets? Crude prices started to rise again after the death of Iranian general Soleimani, killed by an American air attack. Some oil companies are taking advantage of rising tensions, but Saudi company Aramco is not.

The action of Saudi Aramco plunged nearly 2% this Sunday, the day of reopening of the stock exchanges in the Gulf countries. The assassination of the Iranian general by the United States raises fears of an escalation in which Iran could target the oil installations of Saudi Arabia, already struck by drones in mid-September. Of course, this is not a prospect that encourages investing in the Saudi oil company.

Saudi Aramco plunges, the action of American shale producers soars

In contrast, shale oil companies in the United States, sheltered from potential responses, are benefiting from the rebound in oil prices. Their action has already climbed sharply on Friday. 2% for Centenial, 3% for Continental, almost 9% for Whiting. A breath of fresh air for these highly indebted companies, which are faced with the slowdown in American shale oil production.

Oil markets are now questioning the severity of the responses that will be exchanged by Iran and the United States. Eurasia Group expects a low-intensity clash for a month, with attacks by pro-Iranian militias near US bases or as happened on Sunday evening in parts of Baghdad.

Hitting deposits in southern Iraq would blow up prices

Iran could also choose to intensify its harassment against tankers who use the Strait of Bab el-Mandeb, 6 million barrels per day, and of course the Strait of Hormuz, 21 million barrels per day. The cost of marine insurance is expected to continue to rise and the volatility of oil prices to increase, with regular bouts of fever.

But the greatest fear would be that the conflict would spread to the deposits of southern Iraq, the second producer of OPEC with a production of 4.6 million barrels per day now. For the moment, foreign companies are content to bring in their expatriates as a safety measure, but Iraqi production and Iraqi exports are not affected. If so, the price of oil could quickly climb to $ 80 a barrel.