Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
Following Iran’s missile attack on Israel, tensions in the Middle East have significantly escalated, threatening the global oil supply and causing oil prices to surge. On Tuesday, Brent crude rose 3.55% to close at $74.34 per barrel, while WTI crude increased by 3.62% to $70.76 per barrel. Since the first trading day after the October 7, 2023, attack on Israel, oil prices have dropped approximately 19%.
Data from 2023 indicates that the Middle East’s oil production was 1.441 billion tons, accounting for about one-third of the global total.
The Israeli military claimed that Iran launched over 100 ballistic missiles at Israel. However, oil market investors are more concerned about how Israel might respond to Iran’s missile attack, particularly any impact on Iran’s oil industry. An IDF spokesperson stated that Israel would respond to Iran’s missile attack at a time and place of its choosing.
If Israel successfully disrupts Iran’s oil exports or the region’s tanker traffic, global oil prices could rise further.
As a member of the Organization of the Petroleum Exporting Countries (OPEC), Iran’s direct involvement in the conflict could increase the likelihood of disruptions in the region’s oil supply, a situation yet to occur almost a year into the conflict. Dennis Kissler, Senior Vice President of Trading at BOK Financial Securities, noted that while the near-term market panic seems to have played out, trading is expected to remain tense until the situation becomes clearer in the coming days.
WTI dropped 16% last quarter due to expectations that OPEC+ would implement plans to restore production, with other major oil-producing countries also increasing output. Additionally, concerns about weak demand from China, the world’s largest oil importer, have weighed on prices.
Fears of slowing demand growth have led to record short positions among oil speculators. However, if oil prices surge like they did today, closing these short positions could easily trigger further price increases. Rebecca Babin, Senior Energy Trader at CIBC Private Wealth, stated that in the short term, oil prices could rise by a few more dollars as traders cover short positions.
