Oil prices jump more than 2% after U.S. strikes on Iran raise fears of supply disruption

Geopolitical Risk & Energy Market Impact - The market should closely monitor Iran's response to recent events, as the situation is not necessarily resolved despite initial market reactions [1] - Iran possesses multiple options, including targeting US troops or energy supplies, to potentially increase oil prices and influence Western decision-making [1] - Focus should be on three key risk areas: the Strait of Hormuz, the Bab al-Mandab Strait, and the Suez Canal, due to their strategic importance for oil tanker traffic [1] - Despite geopolitical tensions, Iranian oil exports continue, even after bombings, with tankers approaching Iranian oil terminals for loading [1][2] - Approximately 20% of the world's liquefied natural gas (LNG) passes through the Strait of Hormuz, primarily from Qatar, impacting shares of US LNG exporters [3] Potential Iranian Responses & Historical Context - Iran could potentially target energy assets in Iraq, where it has proxy militias operating near Iraqi oil fields, representing a significant risk to energy infrastructure [4][5] - In 2019, after the reimposition of maximum pressure sanctions, Iran and its proxies targeted ships, pipelines, and Saudi Arabia's Abqaiq facility, demonstrating a capacity for impactful actions [6] - Security experts suggest that Iran intentionally limited the damage in previous attacks, opting for warning shots rather than causing maximum disruption [7][8] Oil Market Dynamics - Oil prices initially increased by approximately 4%, and natural gas rose by just over 1%, following the discussed events [1] - The price of oil significantly influences the performance of oil stocks, with rising oil prices generally leading to increased oil stock values [1] - Iraq's oil production, accounting for approximately 4 million barrels, makes it OPEC's second-largest producer, highlighting its importance in the global oil market [4]