Oil prices could rise above $100 a barrel, potentially increasing fuel costs for motorists, if tensions between Israel and Iran intensify, according to analysts in the finance sector.
Currently, Brent crude, the international benchmark, is trading under $90, after peaking at $91.05 a barrel following Iran’s drone strikes late Saturday.
Last week, oil prices approached six-week highs as markets anticipated possible Iranian retaliation for an alleged Israeli attack on its embassy in Syria earlier in the month.
City analysts predict that tensions in the Middle East will remain “extremely high” for the foreseeable future.
Max Layton, an analyst at Citi, noted in a client briefing: “The market has yet to factor in the ongoing direct conflict between Iran and Israel, which could push oil prices to over $100 per barrel, depending on how the situation unfolds.”
Should oil prices exceed $100 a barrel, fuel prices for drivers are likely to climb.
Simon Williams, RAC fuel spokesman, mentioned: “Should oil hit $95 a barrel, petrol prices could return to 150p a litre, which would adversely affect budget-conscious drivers.”
This recent escalation marks the first military attack by Iran on Israel, despite long-standing hostilities that trace back to Iran’s 1979 Islamic Revolution.
Stephen Innes, managing partner at SPI Asset Management, observed: “Although the drone attack is significant news, its immediate effect on global markets, especially oil prices and inflation concerns, might be limited.
“Iran’s calculated and less harmful response indicates a strategic intent to limit damage while avoiding further escalation of tensions.”
