Oil prices surge 3% after reported Israeli strikes on Iran: What's happening?

Israeli missiles had hit a site in Iran and explosions were heard at an airport in the Iranian city of Isafahan, it was reported.

Oil prices rose $3 a barrel following reports that Israeli missiles had struck a site in Iran. The reports sparked concerns over disruption of oil supply owing to which benchmark contracts surged more than $3 to later eases slightly. Brent futures were up $2.63, or 3%, to $89.74 a barrel and US West Texas Intermediate contract climbed $2.56, or 3.1%, to $84.66 per barrel.

Brent futures were up $2.63, or 3%, to $89.74 a barrel.

Warren Patterson, head of commodities strategy at ING, said in a note, as per news agency Reuters, “If these reports turn out to be true, fears over further escalation will only grow, as well as concerns that we are potentially moving closer towards a situation where oil supply risks lead to actual supply disruptions.”

What we know about Israel's strike in Iran so far?

Reports claimed that Israeli missiles had hit a site in Iran and explosions were heard at an airport in the Iranian city of Isafahan. Several flights were diverted over Iranian airspace, CNN reported after Israel's possible retaliation to Iran's drone and missile attack of last weekend when Tehran launched hundreds of drones and missiles in a strike after a suspected Israeli strike on its embassy compound in Syria. Although Israel said that most of the drones and missiles were downed before reaching its territory.

Israel-Iran's conflict and oil prices

Investors have been closely monitoring Israel's reaction to the April 13 Iranian drone attacks while oil prices had been unwinding this week as it was perceived that Israeli retaliation to Iran's attack would be tempered by international pressure.

Moreover, Venezuela lost a key US license allowing the OPEC member to export oil to markets globally. Washington also announced sanctions on Iran, another OPEC member, vehicle after the country's drone strike on Israel. The sanctions on Iran exclude its oil industry.