Oil price rises in recent days reflect a higher risk of Iran becoming more involved in current Middle East tensions, according to CBA's director of mining and energy commodity research, Vivek Dhar.
The Brent Crude oil price closed at US$82.40 per barrel, down 1.38% overnight.
The WTI Crude oil price closed at US$76.96 per barrel, up 0.23%.
Both oil prices reached their highest levels since November in recent days amid concerns over how Middle East tensions may play out from here.
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Middle East tensions supporting oil prices
According to The Australian, Dhar expects tensions between the United States and Iran to continue to support oil prices given the potential impact on global supply chains.
Dhar says global oil supply could be disrupted if Iran gets involved in a direct confrontation with the US.
The world is waiting to see how US President Joe Biden will respond to a drone strike on a US military base in Jordan that killed three servicemen and wounded more than 40 others on Sunday.
Iran has denied any involvement but AP News reports that US officials have "assessed that one of several Iranian-backed groups was behind it".
Dhar says an escalation in US-Iran tensions could result in greater enforcement of sanctions on Iran's oil supply. Iran exports made up about 1% to 1.5% of the world's oil supply in 2023.
But the greater concern is that Iran may blockade the Strait of Hormuz. About 15% to 20% of the world's oil supply transits through there.
Meanwhile, Iran-based Houthi rebels continue to attack international trade ships in the Red Sea, through which about 6.5% to 7% of global oil and fuel supply transits.
Dhar says an attack over the weekend on a tanker carrying Russian fuel for global commodities supplier Trafigura was the "most significant attack on a tanker since tensions in the region escalated in the wake of the Israel‑Hamas war."
ASX oil shares on Tuesday
Oil prices have a direct impact on ASX oil shares because they impact company earnings.
Today, Woodside Energy Group Ltd (ASX: WDS) shares are down 0.52% to $31.75 at the time of writing.
Santos Ltd (ASX: STO) shares are down 0.64% to $7.75.
Beach Energy Ltd (ASX: BPT) shares are steady at $1.63 apiece.
