Bloomberg Opinion: This Iran War Will Not Trigger an Oil Crisis

On March 2, Bloomberg columnist and energy and commodities author Javier Blas wrote that Iran’s attack has a severe impact on oil prices but is not an shock. Blas pointed out that the market’s biggest concern is whether both sides will target energy infrastructure and the forced closure of oil tanker routes. Neither has happened yet. Currently, there are no such events. Despite fears that Iran might set fire to Middle Eastern energy industries, targeting oil fields, refineries, and export terminals, Tehran has not yet turned oil into a weapon. Israel and the U.S. have also not targeted Iran’s oil infrastructure. Analysts say oil prices could surge, but even the most bullish traders are talking about prices possibly reaching $100 per barrel, well below the $139 per barrel seen after the Russia-Ukraine conflict in 2022 and the record $147.50 per barrel in 2008. From a broad perspective, it’s unlikely that this Middle Eastern conflict will trigger an oil shock. Additionally, although physical markets have remained weak, financial oil markets have been bullish, driven by expectations of rising oil prices and increased buying. A year ago, the Israel-U.S. war against Iran on the 12th caught many traders off guard, sparking a wave of buying that pushed crude prices higher. This time, the number of bullish positions is among the highest in the past decade. Therefore, oil traders are better prepared to absorb this crisis.