Global oil prices soared following Israel’s announcement that it had struck Iran, escalating tensions in the Middle East.
The benchmark oil contracts, Brent Crude and Nymex light sweet, rose by more than 10% as traders reacted to the news.
Market experts worry that a potential conflict between Iran and Israel could disrupt oil supply from the energy-rich region, affecting economies worldwide including Ghana. The price of crude oil influences everything from food costs to transportation expenses.
Speaking to the BBC, energy analysts warned that investors are closely monitoring Iran’s response in the coming days. “It’s an explosive situation, albeit one that could be defused quickly as we saw in April and October last year, when Israel and Iran struck each other directly,” Vandana Hari of Vanda Insights told the BBC.
However, she cautioned that the situation could worsen. “It could also spiral out into a bigger war that disrupts Mideast oil supply,” she added.
If tensions escalate further, Iran may target vital infrastructure or shipping routes, potentially disrupting millions of barrels of oil per day. Analysts highlight the Strait of Hormuz as a key concern.
The strait, bordered by Iran to the north and Oman and the United Arab Emirates (UAE) to the south, connects the Gulf to the Arabian Sea and is one of the world’s most significant energy corridors. About one-fifth of the world’s oil passes through it, with several dozen tankers navigating its waters daily.
Saul Kavonic, head of energy research at MST Financial, stated that markets are reacting cautiously to developments. “What we see now is a very initial risk-on reaction. But over the next day or two, the market will need to factor in where this could escalate to,” he explained.
The unfolding situation will be crucial for Ghana and other economies reliant on stable oil supplies. With potential price fluctuations ahead, traders and policymakers will be watching closely for further developments in the Middle East.
