Global Oil Prices: Iran-Israel Strikes Hit Refinery And Gas Facilities

Global oil prices continued to climb this week as tensions between Iran and Israel escalate, showing no signs of de-escalation in the Middle East crisis.

At the time of this report, Brent crude was trading at $74.25 per barrel, while West Texas Intermediate (WTI) stood at $73.10 per barrel. Nigerian crude grades, including Brass River and Qua Iboe, were priced at $77.09 and $77.14 per barrel, respectively.

The surge in prices follows Iran’s weekend attack on Israel’s 197,000-barrel-per-day Haifa Refinery. The facility’s operator, Bazan, confirmed the strike in a statement released on Sunday.

While the plant remains operational, Bazan reported that the downstream section has been shut down as a result of the attack.

“The refining facilities continue to operate, while some downstream facilities at the complex have been shut down,” it said.

In a swift retaliation, Israel targeted two of Iran’s key gas treatment facilities located in the southern region of the country.

The strikes have caused significant disruption across the Middle East, further intensifying the regional crisis.

Commenting on the situation, Richard Joswick, head of near-term oil analysis at S&P Global Commodity Insights, told Reuters that Iranian crude exports have been disrupted, posing an immediate threat to China, Iran’s primary oil customer.

“If Iranian crude exports are disrupted, Chinese refiners, the sole buyers of Iranian barrels, would need to seek alternative grades from other Middle Eastern countries and Russian crudes.”

“This could also boost freight rates and tanker insurance premiums, narrow the Brent-Dubai spread, and hurt refinery margins, particularly in Asia,” Joswick added.

Another ripple effect of the ongoing Israel-Iran strikes is the growing reluctance among tanker owners to operate in the region. Many are now refusing to send their vessels to the Persian Gulf and are withdrawing those already present, citing heightened security risks.

Accordingly, the chief executive of Frontline, the world’s largest tanker operator, quoted by oilprice.com, said, “Trade is going to become more inefficient, and, of course, security has a price”.