Business

G****l oil price eases after brief jump as Iran downplays attack

Tuesday, April 23rd, 2024 08:50 | By
Oil prices ease up. PHOTO/Print

Oil and gold prices have eased after Iranian authorities appeared to downplay reports of an attack from Israel. Brent crude, the international benchmark, fell after jumping briefly to over $90 a barrel after reports emerged of an attack.

Gold briefly came close to a record high before settling below $2,400 an ounce. There are concerns a worsening conflict in the Middle East could disrupt oil supplies. Investors have been closely watching Israel’s reaction to Iran’s direct drone and missile attack last weekend. Oil prices had jumped by as much as 3.5 per cent initially. But Brent then fell back to roughly $87 a barrel after Iranian state media claimed that there was “no damage” in Isfahan province where there had been reports of explosions.

Sharp and sustained rises in oil prices risk fuelling inflation. Countries are heavily reliant on the commodity, which is used to produce fuels such as petrol and diesel. Fuel and energy prices have been a major driver behind the higher cost of living worldwide in the past couple of years.

Interest rates

Randeep Somel, fund manager at M&G Investment Management, told the BBC’s Today programme: “The concern for markets would mainly be the inflationary one, that this would actually add to inflation.” While the pace of inflation has been slowing, in the UK it is still above the Bank of England’s 2 per cent target and some economists have forecast that a cut to interest rates may not happen until summer or later on in the year.

“In the UK, the inflation rates is still around 3.2 per cent - still someway off the target – and it is becoming a bit of a concern for policy makers,” said  Somel. “It is good to see that this hasn’t escalated any further and that hopefully the disruption to markets is short-lived.”                                           

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