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Oil prices hit highest level since 2022

Brent futures approached $90 per barrel on Tuesday

The price of the oil benchmark Brent peaked at $89 per barrel on Tuesday, nearing levels last seen in June 2022, according to Intercontinental Exchange (ICE) data. Industry experts have attributed the surge to an Israeli airstrike on the Iranian consulate in Damascus and Tehran’s threat of retaliation. 

Brent futures had risen by nearly 2% since Monday to trade at $89.060 per barrel as of 10:25 GMT, before retreating slightly, according to the ICE figures. The US benchmark West Texas Intermediate exceeded $85.

On Monday, Iran – a major oil producer – threatened a “harsh” response against Israel. The attack on the Iranian diplomatic compound in Damascus killed seven Iranian military advisers including three senior commanders.

Israel has repeatedly targeted Iranian installations in Syria, due to Tehran’s alleged support of the Palestinian group Hamas in Gaza. Although Israel has not commented on the latest strike, the New York Times cited four unnamed Israeli officials as acknowledging that Israel was behind it.

Oil prices have rallied in recent months on fears that the Israel-Palestine conflict could spread to the broader Middle East. The region is a crucial supplier of energy and a key oil shipping route.  In mid-March the price of Brent climbed to $85 per barrel as Yemen’s Houthi militants stepped up their rocket fire on merchant ships in the Red Sea, calling it retaliation for the actions of Israel and its supporters.

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According to a projection by Bloomberg Economics, oil prices could reach $150 per barrel if Iran joins the conflict.  

ICE data suggests that Brent last traded above the current level in June 2022 ($98.460 per barrel on June 28, 2022), during the early stages of the Western sanctions campaign against Russia, a major oil exporter, over the Ukraine conflict.

The advance in crude prices has also been underpinned by OPEC+ production cuts, strong economic data from China, and economists’ expectations of a global deficit this year.

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