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Investing.com - Oil’s geopolitical risk premium has climbed in the wake of Israeli airstrikes on Iran early on Friday, according to analysts at Texas Capital Securities.
In a note to clients, the strategists led by Derrick Whitfield added that the threat of a potential disruption to oil flows can provide a short-term lift to oil prices.
However, they noted that risk premiums -- or the additional return an investor demands during times of political uncertainty -- could fade quickly "unless there is a lasting impact on oil supply and/or transit."
Iran currently exports roughly 1.65 million barrels per day of crude oil, as well as 400,000 barrels per day of refined petroleum products, the analysts said.
Oil prices surged on Friday following Israel’s large‑scale airstrike on Iran, which hit “dozens” of military and nuclear targets, according to media reports.
At 03:02 ET (07:02 GMT), Brent futures had climbed 5.7% to $73.32 a barrel and U.S. West Texas Intermediate crude futures rose 6% to $72.13 a barrel. Both contracts hit their highest in almost five months, as traders worried that any conflict could disrupt shipping routes or oil infrastructure across the Gulf.
Iran launched around 100 drones towards Israeli territory in response, an Israeli military spokesman said. Sirens and a state of emergency were declared across Israel amid warnings of an imminent missile and drone counter‑strike from Tehran.
Iran’s state media confirmed reports saying that the strikes had killed Iran’s Revolutionary Guards Commander Hossein Salami, along with six nuclear scientists.
Writing in a separate note, analysts at RBC Capital Markets argued that oil’s "ultimate landing point" will likely hinge on whether Iran chooses to target tankers, pipelines and key energy facilities across the Middle East in retaliation to the strikes. Security fears in the Strait of Hormuz -- a major shipping artery -- will specifically be heightened, they said.