Following the increased tensions between the US and Iran caused by the assassination of Qassem Suleimani, Will Scargill – Managing Oil & Gas Analyst at GlobalData – has offered a view on how this will impact the global oil market, noting that wider market context will limit a negative effect on supply.

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“Increased tensions between the US and Iran following the assassination of Qassem Suleimani certainly add risk to the global oil market,” remarked Mr Suleimani, with the oil price pushing past US$70 per barrel for the first time in seven months on Monday (6th January). 

 

“The potential for disruption to major supply centres was brought into sharp relief by the attacks on Saudi Aramco’s Abqaiq and Khurais facilities in September 2019. However, it should be remembered that the wider market context is one of global oversupply, with the OPEC+ group having agreed additional production cuts last month,” he noted.

 

The senior oil & gas analyst went on to point out that oil prices soon returned to previous levels after the September attacks despite these having temporarily taken out around five per cent of global supply. “Therefore, the effect on the oil market of these heightened tensions is likely to be time- and value-limited,” he predicted. “More significant market effects would likely only come from a major escalation in Iran’s response, such as major disruption to oil transit through the Strait of Hormuz.”