As Israel’s retaliation against Iran looms, U.S. President Biden stated on Thursday (October 3) that the U.S. is discussing a possible Israeli attack on Iran’s oil facilities. Oil prices surged by 5% in response. Biden also mentioned that it is expected that Israel will not launch any attacks on Thursday.
Before leaving the White House for Florida and Georgia, Biden addressed questions from reporters regarding the Middle East conflict.
When asked whether he would support Israel in striking Iran’s oil facilities, the President responded, “We are discussing that issue,” but added, “Nothing will happen today; we will talk about it later.”
On Wednesday, Biden explicitly stated that he does not support Israel’s attack on Iran’s nuclear facilities. However, he mentioned that earlier on Wednesday, he had a phone call with G7 leaders, and all G7 member countries agreed that Israel should “make an appropriate response.”
The President declined to reveal which sanctions the U.S. is considering on Iran. He also added that there is currently no new information on the hostages held by Hamas in Gaza.
Iran is the world’s seventh-largest oil-producing country, exporting about half of its production overseas, mainly to China.
On Tuesday (October 1), Iran launched approximately 200 missiles at Israel in retaliation for Israel’s previous killing of a Hezbollah leader. Iran’s retaliatory strike has significantly escalated tensions in the Middle East. Despite Israel intercepting most of Iran’s missiles, Prime Minister Netanyahu stated that Iran made a big mistake and will pay the price for it.
Since Iran’s attack, the oil market has remained tense. The benchmark Brent crude oil price has risen by 10% to $77 per barrel but is still below earlier levels this year.
Any continued rise in energy prices could result in higher gasoline prices, increased natural gas and electricity costs, thereby increasing inflation rates.
Concerns have been raised about whether any escalation in the Middle East situation could block the Strait of Hormuz – one-third of oil shipments and one-fifth of liquefied natural gas (LNG) transportation must pass through this strait.
Analysts suggest that depending on Israel’s next move, there is a potential risk of a larger-scale war that could bring energy costs back into focus.
Some traders seem to be betting that oil prices will climb from the recent $73 per barrel to $100.
(This article referenced reports from BBC, CNN, and The Wall Street Journal.)