Israel Carried Out Limited Military Strike Against Iran
April 19, 2024
Israel has retaliated against Iran and the market reacted higher on the first news of these attacks but has since turned around and is trading in negative territory. WTI crude oil rallied nearly $ 3 dollars on the news of the attack to over $85 dollar per barrel. The calendar 2025 WTI strip price was up nearly a $1.00 to $75.20 per barrel. But as the news became clearer that no major issues resulted from the attacks prices have pulled back. Reports say multiple sites were targeted and there was a rumor that one of those was a nuclear facility but none of this has been confirmed. Iran has called the attack a failure and said they have no immediate need to retaliate, and this news is likely the biggest reason for the selloff in energy prices.
It does seem odd that we have had two attacks and in both case the market has turned lower. This either points to a market that has been way over done and the risk premium being seriously overbought. Or the other thought is that no damage has been done to upset oil production, so traders have taken their profits. But the uncertainty still exists and now we must be concerned about what will happen next in this ongoing conflict. The volatility is sure to continue, and prices will be reactive to the headlines and may need a true disruption to oil infrastructure or supplies before prices see a sustained reaction.