Cost of oil and gas surges following Iran attack
Revised Article:
Iran Conflict Triggers Global Oil Price Surge
After Israel's airstrikes on Iranian cities and nuclear facilities, oil and gas prices have skyrocketed. In Germany, gasoline and diesel prices shot up by two cents per liter by Friday afternoon compared to the previous day, according to ADAC. Oil companies are expected to hastily pass on the increased oil prices to drivers.
stock markets responded with a touch of weakness to the Middle East news. Gold and government bonds were sought after as safe haven investments. Amid the escalation, German shipping companies are worried about the safety of maritime trade routes. Air travel in the region is limited.
Israel launched a massive attack on Iranian cities and nuclear facilities overnight, striking targets in Tehran and western Iran. Iran's Supreme Leader Ayatollah Ali Khamenei vowed retribution.
Oil and Gas Supply Concerns
In response, a barrel (159 liters) of Brent crude oil for August delivery soared to $78.50 on Friday, marking a 13% increase from the previous day and the highest level since January. In the trading session, the price dropped back to $74.04. The price trend for U.S. WTI crude was similar.
Amid the concerns, gas supply worries multiplied. The price of the benchmark TTF contract for European natural gas delivery in a month spiked to €38.57 per megawatt hour (MWh) on the Amsterdam exchange, representing a more than 5% increase from the previous day and the highest price since early April.
stock markets displayed negative reactions to the conflict. The DAX plummeted over one percent. By the afternoon, the German stock market index had dropped 1.12 percent to 23,505 points, well above its daily low. The Euro Stoxx 50 index slid by 1.2 percent. Major stock markets in the Asia-Pacific region suffered losses of a similar magnitude.
Trade Route Risks
The German Shipowners' Association (VDR) in Hamburg noted potential hazards for trade: "A regional conflagration could consume additional states and central maritime traffic arteries," it stated. Important sea trade routes run through the Middle East, where numerous bottlenecks exist: the Strait of Hormuz between Iran and Oman, the Red Sea, and the Bab al-Mandab strait linking the Red Sea in the south with the Gulf of Aden.
Maritime trade in the region has been vulnerable for some time. The Houthi militia has been attacking ships since the outbreak of the war in late 2023, causing many shipping companies to take detours.
Airlines Cancel Flights
The largest German airline, Lufthansa, is temporarily steering clear of the Middle East. Lufthansa Group flights to and from Tehran have been suspended "due to the current situation" until July 31, according to the airline's announcement in Frankfurt. The Tel Aviv airport will also stop operations until the end of July. Several other airlines, including Emirates Airlines and Dubai-based Flydubai, have likewise canceled or rerouted flights in the region. Previously, Iraq and Jordan announced temporary airspace closures.
Insights:
- Oil Prices: An escalation in the conflict could push prices beyond $100 per barrel for the first time since 2022, but stabilization is anticipated if tensions de-escalate without major disruptions[1].
- Stock Markets: Potential effects on the stock market depend on the severity of the disruptions in oil supplies and the overall market sentiment[1].
- Maritime Trade Routes: The Strait of Hormuz plays a crucial role in global oil trade and could be severely affected if the conflict reaches Iran, potentially leading to oil price hikes and shortages[1].
[1] Based on enrichment data analysis.
- The surge in oil prices due to the Iran conflict might cause concerns in the sports domain, especially for those reliant on motorized vehicles for transport, like Formula One teams or other athletic events that use fuel-powered vehicles.
- As tensions rise in the Middle East, some sports events might face transport disruptions, such as the cancellation or postponement of international matches involving teams from the affected regions, or the suspension of flights for athletes and staff traveling to and from the region.
