RBC Highlights Middle East Tensions Stoking Oil Friday

Helima Croft, Head of Commodity Strategy at RBC commented on the escalation in the Middle East in an interview with CNBC – a series of events responsible for driving crude higher Friday.

• “The question is, is this essentially one theatre of conflict. The US is targeting [Iranian] IRGC Revolutionary Guard bases in Syria, those bases have been used to attack groups in Israel and US fighters in the region.” Croft said.
• “We’ve had 12 attacks on bases housing US personnel in Iraq and Syria since this war began. The concern has always been this would not remain a war isolated to Gaza because of Iranian Guard proxies across the region.” Croft added.
• “The attacks on US personnel in the region by Iranian linked groups is very worrying. The path of escalation could come through such attacks.” Croft concluded.
• On the US strikes in Syria on Iranian linked targets, US Secretary of Defence Lloyd J.Austin III said “these narrowly-tailored strikes….are separate and distinct form the ongoing conflict between Israel and Hamas and do not constitute a shift in our approach to the Israel-Hamas conflict”
• The Biden Administration has been seen to have turned a blind eye to surging Iranian oil flows to China this year. It has little motivation to target them while it has sought lower global oil prices during substantial OPEC+ cuts but fears are that greater conflict with Iran may bring these flows under more scrutiny.
• Brent futures have wavered around $90/bbl Friday due to the war risk premium.