Iran conflict spurs early oil price surge
· Axios
Crude oil prices spiked by over $6 per barrel — their highest level in slightly over a year — in initial trading on Sunday.
Why it matters: The surge from the Asia markets' opening is the first major evidence of how markets are digesting the potential for supply disruptions from the strikes against Iran.
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- It will push up U.S. gasoline prices, though the impact will depend on the evolving market response as well as the scope and duration of the conflict.
Driving the news: The global benchmark Brent crude was trading at $79.20 per barrel — up over 8% from Friday's close.
- "The risk of escalation is greater than seen in recent regional conflicts," said Jason Bordoff, founding director of Columbia's Center on Global Energy Policy, in an essay before markets opened.
- Markets "will be pricing not just barrels lost," but the probabilities of possible events around an escalation, he said.
My thought bubble: The early increase — substantial, but short of some predictions — signals that traders don't see anything approaching a worst-case scenario that curtails supplies on a broad scale.