Oil prices surged on Monday following confirmation from Tehran that Iranian President Ebrahim Raisi, Foreign Minister Hossein Amir-Abdollahian, and several other officials died in a helicopter crash in the northwestern province of the country.
At 10:44 a.m. local time (0744 GMT), Brent crude, the international benchmark, was trading at $84.24 per barrel, reflecting a 0.31% increase from the previous session’s closing price of $83.98 per barrel.
Similarly, American benchmark West Texas Intermediate (WTI) traded at $79.81 per barrel, marking a 0.29% rise from the previous session, which closed at $79.58 per barrel.
The tragic incident occurred on Sunday afternoon in the East Azerbaijan region of northwest Iran. The helicopter carrying the Iranian president, the foreign minister, and their entourage crashed, leading to a night-long search operation hindered by adverse weather conditions. Mohsen Mansouri, Iranian Deputy President for Executive Affairs, confirmed via a statement on X that all onboard, including the president, the foreign minister, their delegation, and the helicopter crew, had perished.
This event has triggered concerns about potential political instability in the oil-producing nation, raising fears about its impact on upcoming decisions at the Organisation of the Petroleum Exporting Countries (OPEC) and its allies’ (OPEC+) meeting on June 1. According to the latest OPEC report, Iran produces over 3 million barrels of oil daily.
In addition to geopolitical concerns, hopes that the US Federal Reserve (Fed) will cut interest rates this year continue to influence oil prices. Financial markets, which currently rate the probability of a Fed interest rate decrease in September at 65%, are beginning to price in this expectation. A weaker US dollar makes oil trade more affordable for holders of other currencies, thus boosting trade and prices.
Furthermore, robust economic data from China, the world’s second-largest oil consumer and largest importer, is also supporting price increases. Last week, China announced plans to issue subsidised bonds worth 1 trillion yuan, signalling strong oil demand and contributing to the rise in oil prices.
Union Jack Oil plc (LON:UJO) is an onshore oil and gas exploration company with a focus on drilling, development and investment opportunities in the United Kingdom hydrocarbon sector.
