Israel's attacks on Iran raise oil prices worldwide

Global oil prices have surged after Israel said it had attacked Iran, in a dramatic escalation of tensions in the Middle East.

The price of Brent crude oil rose by more than 10% immediately after the news was released, reaching its highest level since January.

Traders are concerned that a conflict between Iran and Israel could disrupt supplies coming from the energy-rich region.

The cost of crude oil affects everything from how much it costs to fill up your car with gas to the price of food at the supermarket.

As financial markets in Europe opened, prices were down slightly, about 5% higher than the previous day's closing price. Brent crude traded in London was at $72.80 a barrel, while oil traded on the US Nymex was at $73.20.

Stock prices also fell in Asia and Europe. The UK's FTSE 100 index opened down 0.6%. Safe-haven assets such as gold and the Swiss franc have seen gains. Some investors see these assets as safer investments in times of uncertainty.

Gold prices hit their highest level in nearly two months, rising 1.2% to $3,423.30 an ounce. Following Israel's attack, the Israel Defense Forces (IDF) said Iran had launched about 100 drones toward the country. Analysts said energy traders would now watch to see how the conflict escalates in the coming days.

“It’s an explosive situation, albeit one that can be quickly defused as we saw in April and October of last year, when Israel and Iran directly hit each other,” said Vandana Hari of Vanda Insights.

"It could also turn into a larger war that disrupts oil supplies in the Middle East," she added.

In an extreme scenario, Iran could cut off supplies of millions of barrels of oil per day if it targets infrastructure or shipping in the Strait of Hormuz.

The strait is one of the most important shipping routes in the world, with about a fifth of the world's oil passing through it.

At any given time, there are several dozen tankers on their way to, or leaving, the Strait of Hormuz, as major Middle Eastern oil and gas producers and their customers transport energy from the region.

Bordered to the north by Iran and to the south by Oman and the United Arab Emirates (UAE), the Strait of Hormuz connects the Gulf with the Arabian Sea.

“What we see now is a very initial reaction to risk. But over the next day or two, the market will have to consider where this could escalate,” said Saul Kavonic, head of energy research at MST Financial. / Monitor.al