Oil Prices Climb on Expectations of Further Escalation in the Middle East

Crude oil prices rose further today on fears that the war in the Middle East is going to get bigger and more intense after Iran fired missiles at Israel, with WTI still above $70 and Brent crude close to $75 per barrel.

Tehran said early today that the attack was over—unless there was further provocation—while Israel essentially signaled it would guarantee such “provocation” as Prime Minister Benjamin Netanyahu vowing Iran “will pay” for the attack.

The UN’s Security Council has scheduled a meeting to discuss the latest events in the Middle East later today. The European Union has called for an immediate ceasefire.

“Our action is concluded unless the Israeli regime decides to invite further retaliation. In that scenario, our response will be stronger and more powerful,” Iranian Foreign Minister Abbas Araqchi said on X “Our action is concluded unless Israeli regime decides to invite further retaliation. In that scenario, our response will be stronger and more powerful.”

“Israel’s enablers now have a heightened responsibility to rein in the warmongers in Tel Aviv instead of getting involved in their folly,” Araqchi added, also noting in the statement that Iran’s attack was an act of “self-defense under Article 51 of the UN Charter, targeting solely military & security sites in charge of genocide in #Gaza and #Lebanon.”

In response, Israel’s Netanyahu said “Iran made a big mistake tonight – and it will pay for it.” Israel’s ambassador to the UN, Danny Danon, told the media “We will act. Iran will soon feel the consequences of their actions. The response will be painful,” as quoted by Reuters.

This suggests that the chance of a ceasefire is distant and the risk of a further escalation in hostilities is considerable, lending support to oil prices. Still, the climb has been slow and relatively moderate so far, suggesting downward pressure remains considerable.