Oil Prices Surge as Iran-U.S. Escalation Rattles Markets

After Iran attacked commercial tankers in the Strait of Hormuz yesterday, and the United States responded overnight (between Tuesday and Wednesday) with strikes on more than 80 targets inside Iran and the reinstatement of sanctions on Iranian oil exports, concerns are mounting over another potential disruption to Middle East oil supplies.

Amid the escalating tensions, oil prices continued to rise after already climbing yesterday following the tanker attacks. Brent crude gained more than 3% and was trading at around $76.50-$77 per barrel during the morning. U.S. WTI crude also rose more than 3%, reaching approximately $72.70-$73 per barrel.

The latest gains follow a sharp decline in oil prices after the memorandum of understanding aimed at ending the conflict was signed last month. At that time, crude prices fell below $70 per barrel, returning to pre-conflict levels. The drop also contributed to lower fuel prices in Israel, which are closely tied to global oil prices.

Meanwhile, the U.S. dollar continued to strengthen against the shekel, trading slightly above 3.05 shekels during the morning after its representative rate was set at 3.02 shekels yesterday. The euro also climbed to about 3.48 shekels, up from yesterday's representative rate of 3.46 shekels. Analysts attribute the stronger dollar in part to the recent interest rate cut, which has added pressure on the shekel.

The Tel Aviv Stock Exchange also extended its losses. The TA-35 index fell about 0.25%, the TA-125 declined roughly 0.63%, and the TA-90 dropped about 1.1%.

The declines follow even steeper losses recorded yesterday, when the TA-35 fell about 1.9%, while both the TA-125 and TA-90 lost around 2%. Sector indexes were also hit, with the TA-Renewable Energy and TA-Technology indexes each dropping about 4%.