Commodities Corner: What drone attacks on Iran mean for oil prices

by | Jan 30, 2023 | Stock Market

Heightened tensions in the Middle East, after Israeli drones carrying bombs reportedly attacked an Iranian defense factory in the central city of Isfahan, have done little to shake up the oil market — at least so far. Here’s why:

What happened Authorities in Iran said Sunday that bomb-carrying drones targeted an Iranian defense factory, causing damage to the plant as regional and international tensions grow in the Islamic Republic, according to a report from the Associated Press. The Wall Street Journal reported Sunday that Israel carried out the drone strike on the defense compound in Iran, citing U.S. officials and people familiar with the operation. The report pointed out that Israel’s strike comes as Israeli and American officials discuss new ways to combat what it referred to as Iran’s “destabilizing operations,” including its deepening military cooperation with Russia. Last week, Rafael Grossi, the director general of the International Atomic Energy Agency, told a European Parliament subcommittee in Brussels that Iran has amassed enough material for “several nuclear weapons,” according to CNN. Oil price reaction The front-month benchmark contracts for U.S. and global oil futures gained overnight, following the news, but the rise was short-lived. March Brent oil
which expires at the end of Tuesday’s trading session, touched a high of $87.51 a barrel on ICE Futures Europe Sunday night, data from FactSet show. It has since pulled back to $85.78, down 88 cents, or 1%, from Friday’s settlement.

March West Texas Intermediate crude

climbed to as high as $80.49 a barrel on the New …

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