Israel hit a petrochemical plant in southwestern Iran early on Monday, the first direct energy strike on Iranian territory since the April 8 ceasefire, as hostilities in the Middle East rapidly escalated during the weekend.
Israel and Iran traded missile strikes on Sunday, with Iran targeting Israel and Israel retaliating on Iranian targets. The escalation swiftly led to a 5% spike in oil prices early on Monday in Asian trade amid market fears that a U.S.-Iran deal is becoming increasingly elusive.
The Israel Defense Forces (IDF) on Monday confirmed they had launched airstrikes on Iranian petrochemical facilities in southwest Iran.
The Israeli Air Force struck “several targets” at the petrochemical complex in the Mahshahr area, the military said in a brief statement, despite U.S. President Donald Trump reportedly calling out Israeli Prime Minister Benjamin Netanyahu for the previous strikes over the weekend.
President Trump attempted to reassure markets that diplomacy remains on track, telling the Financial Times shortly after Iran’s attack that the United States “calls the shots” and that Israel’s Prime Minister Netanyahu “won’t have any choice”. The President added that the attacks “will not have any effect” on the negotiations of a potential U.S.-Iran peace deal.
President Trump has reportedly criticized Israel’s strikes in Beirut, urged Netanyahu not to retaliate, and pressed Iran to resume talks.
“The exchange is one of the most serious tests of a ceasefire that took effect on April 8 to halt fighting involving the US, Israel and Iran,” analysts at Saxo Bank said in a note early on Monday.
“Despite repeated optimism from the US administration, a lasting peace agreement appears increasingly elusive,” the analysts added.
“The near-closure of the Strait of Hormuz continues to tighten global energy markets, with several oil majors warning that the window before physical shortages begin to emerge may be measured in weeks rather than months.”
By Tsvetana Paraskova for Oilprice.com
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