In the shadow of Iran's recent missile attack on Israel, the oil market once again finds itself in the middle of foreign conflicts and global economics. The balance of maintaining the "Goldilocks price” for oil—neither too high nor too low—is a delicate art. Yet, the current Middle Eastern tensions are spreading a significant shadow over this effort.
The risk perception in the market has drastically shifted. While oil is still flowing out of the Middle East, the recent military action by Iran has the oil market waiting to see how Israel will respond. Such actions and potential reaction lead to speculative surges in oil prices as traders hedge against possible future disruptions.
According to Bloomberg, OPEC+ is treading a tightrope. Despite keeping oil production tightly reined in—thereby supporting prices above $80 a barrel—the group hints at possible increases in production. The decision, expected at their next meeting, reflects the uncertain market conditions.
Longer-term, international conflicts remain the wildcard. While direct impacts on oil flows have been minimal so far, any escalation between Iran and Israel—or broader regional conflicts—could change this overnight.
California’s policymakers are driving the state off an energy cliff. Shutting down in-state producers in favor of foreign imports is shortsighted and dangerous.
For more information, contact Sean Wallentine.
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