As we reported yesterday, Iran was a melting pot of emotion and anger as it was yet again hit by another economic sanction on Sunday. The oil potent state passed on candid threats on how it would seal off access to the Hormuz Strait. Today, tensions from Iran have sparked off a lot of mixed reactions and in the process contributed to an increase in oil price. The price per barrel came in at $101- a high not recorded ever since June 11th.
This comes as the big players in the global front turn against Iran threatening action for what has been deemed by many as irrational and uncalled for. All the same, Iran is not willing to back down. In fact, it has fully displayed that it is ready for anything. Today, the Middle Eastern state revealed that it had successfully tested the effectiveness of missiles capable of striking Israel in response to earlier threats of military action.
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While Brent crude was up by $3.86 to $101.20 a barrel, U.S crude oil recorded a steeper increase. The price per barrel in the U.S came in at $87.75- a $4 increase from previous prices.
The whole issue comes at a time when the global market is wedged between a rock and a very hard place; probably diamond, I heard it was the hardest. The prevailing circumstances are unbearable at the least. The global economy is still rickety from Eurozone woes, U.S and China who happen to be the biggest oil consumers have posted weak economic data and the market at large desperately clings to mere speculations of hope- nothing material.
Although European shares were up this morning, the outlook is still majorly dim. The Iran factor is too big to overlook. Back in 2011 almost a fifth of global production- 17 million barrels a day- passed through Hormuz Strait.
If Iran’s threat’s see’s the light of day, it could be catastrophic. As Ben Le Brun, a market analyst at OptionsXpress, Sidney put it, “Iran is always a factor and it has the potential to have a dramatic impact on oil prices.”
In the American market, big wig oil players like Exxon Mobil Corporation (NYSE:XOM) opened trading at $85.69.