Oil prices rose more than $4 a barrel on Friday, reaching their highest level in over five months since Israel bombed Iran on early hours of Friday.
Brent crude futures rose $4.60, or 6.63%, to $73.96 a barrel at 0612 GMT, after reaching an intraday high of $78.50, the most since January 27. U.S. West Texas Intermediate crude rose $4.99, or 7.33%, to $73.03 per barrel after reaching a high of $77.62, the highest since January 21.
The intraday advances on Friday were the highest for both contracts since Russia invaded Ukraine in 2022.
Iran is one of the world’s top oil producers, selling practically all of its output to China, which uses 15% of the worldwide supply. Iran’s state oil company’s sales to China account for around 6% of the country’s total economic output and over half of its total government spending.
Iran’s exports have suffered in recent years as international sanctions have hampered its capacity to update oil extraction and transportation technology.
However, Iran’s shipments have begun to rebound over the last year due to strong demand from China, which would be obliged to buy oil elsewhere if a larger conflict disrupted Iranian supply.
China has a significant strategic oil reserve built up during a decade of purchases that might let it endure a week-long pause in imports.
Iran is strategically located on the northern side of the Strait of Hormuz, near the outlet of the Persian Gulf. In response to the Israeli strike, Iran may limit oil and natural gas exports from other Mideast oil companies. The strait transports almost one-third of global seaborne oil exports.
