Recent surge in oil prices may be temporary: Kazakh expert

The escalation of the conflict between Iran and Israel following Iran's attack on Israel on April 13 has made analysts, traders, and investors reflect on the potential impact on global oil prices. Any conflict in the Middle East leads to rising prices but this surge may be temporary, Kazakh expert in oil and gas Askar Ismailov told Kazinform News Agency.

"This is a typical situation indicating that oil prices are not linked to market mechanisms. Instead, it is more about 'psychonomics' if such a term exists where oil prices respond not to changes in consumption but to the news background. Therefore, the price will spike for some time," he said. 

According to him, further impact on oil prices will depend on how the situation plays out. Iran's daily oil production surpasses 3 million barrels a major producer within the Organization of the Petroleum Exporting Countries (OPEC).

"The further reduction in oil prices depends on several factors - if the conflict ends, if the conflict shifts to a protracted phase, if global production volumes increase and if the dollar appreciates against the global currency basket, for example, if the Federal Reserve raises rates," he said. 

Ismailov said a short-term price increase is beneficial for Kazakhstan.

"It will help replenish the budget with foreign currency. In the long term, an increase in oil prices will lead to the growth of all sectors of the economy related to transportation. This, in turn, will cause prices in all markets to rise. Metals, food products, light industry. All prices will increase as the cost part of production rises," he said. 

Oil remains key export commodity for Kazakhstan. Accordding to the Bureau of National Statistics, in 2023, crude oil and crude oil products accounted for 53.8% of the country's total exports.