Another session to hold your breath at the opening of the European session. Every morning, investors keep an eye on the price of oil, which has once again spiked above $100 per barrel for a few hours, and on the debt market, which concerns Donald Trump - whose goal is to reduce the deficit - with the US 10-year bond climbing back above 4.3%, which is not good for the Republican Administration's accounts.
So far, the historic announcement made yesterday by the International Energy Agency (IEA) to release 400 million barrels of crude oil stored in its emergency reserves has had little effect. This is double the amount released in 2022 when the same organization tried to contain the spiral caused by the Ukraine war. Spain will release 11.5 million barrels under this agreement. Oil surpassed the $100 per barrel mark again on Thursday, and at this hour, it is trading slightly below with a 7% increase. The European reference natural gas, the Dutch TTF, is up another 4%, at 52 euros per MWh.
Experts acknowledge that the oil price is very sensitive to the developments in the Middle East region. This morning, as reported by the Associated Press, Iran attacked a container ship off the coast of Dubai, caused a fire near Bahrain's international airport, targeted a major Saudi oil field with a drone attack, and forced Iraq to halt operations at all its oil terminals following an attack on its Basra port in the Persian Gulf.
Sirens sounded before dawn in Jerusalem as Israel intercepted incoming Iranian missiles, and loud explosions were heard later in the day in another attack on the city. Israel launched a "large-scale wave of attacks" on Tehran and in Lebanon, where Israel claims to be targeting Hezbollah militants linked to Iran, 11 people died in two early morning attacks.
On the same Wednesday, the spokesperson for Khatam al-Anbiya, from Iran's Central Headquarters of Air Defense and Joint Operations, graphically threatened (holding a two in his hands) the possibility of seeing oil at $200, more than double the current levels. Is that possibility real? Yes, but it is remote and not currently being considered in the public reports of analysis firms and investment banks that in the worst-case scenarios predict sustained prices above $120, which would already have an impact on global economic growth and inflation.
Barclays analysis firm states in a client report that India, China, and the US are the countries most affected by the closure of the Strait of Hormuz. Spain is also among them. According to their calculations, our country is the largest importer of nitrites and nitrates, additives used in the meat industry that could affect food prices and the margins of livestock farms.
The European Central Bank (ECB), on the other hand, believes that there is already an 'supply shock' that will likely weigh on economic growth and raise prices in the eurozone. The ECB's Vice President, the Spaniard Luis de Guindos, admitted yesterday at an event organized by Deloitte and ABC that the current situation of war in Iran is "complicated" not only due to the lack of certainty from the Trump Administration in the US but also because of the high volatility in energy prices. The European banking regulator will meet for two days next week, in its first governing council since the conflict in the Middle East erupted fifteen days ago.