Viewpoint: The current conflict in Iran has a detrimental impact on oil prices, but it is not a shock and is unlikely to trigger an oil crisis

Javier Blas, a columnist for Bloomberg focusing on energy and commodities, wrote that the Iranian attacks have a severe impact on oil prices but are not a shock.

Blas's article points out that the market is most concerned about whether both sides will target energy infrastructure and the forced closure of tanker routes. Neither of these has happened yet. There is still no indication of this. Despite fears that Iran might set fire to the Middle Eastern energy industry, targeting oil fields, refineries, and export terminals, Tehran has not yet weaponized oil. Israel and the United States have also not targeted Iran's oil infrastructure.

Analysts say that oil prices are likely to soar, but even the most bullish traders are talking about a possible rise to $100 per barrel, which is far below the $139 per barrel peak reached after the outbreak of the Russia-Ukraine conflict in 2022, and the record $147.50 per barrel in 2008. Viewed through that wide-angle lens, this time in the Middle East is unlikely to trigger an oil shock.

Additionally, although the physical market has been weak, the financial oil market has remained bullish, with traders rushing to buy oil in anticipation of rising prices. A year ago, the 12-day war between Israel and the United States caught many traders off guard, triggering a wave of buying that caused crude oil prices to spike. This time, the number of bullish positions is at one of the highest levels in the past decade. Therefore, oil traders are better prepared to absorb this crisis.