The recent surge in crude oil prices has sent shockwaves across global markets. The reason? A sudden and intense escalation in the Middle East. Especially due to Hamas launching a significant attack on Israel with the neighbors taking sides. Thus, the oil prices skyrocket following Hamas attack on Israel gave rise to global concerns.
The Immediate Aftermath
Crude oil prices witnessed a sharp spike, jumping by more than $4 in the immediate aftermath of the conflict. Brent crude hovered close to the $88 per barrel mark during morning trades in Asia. Also, West Texas Intermediate (WTI) was trading at over $86 per barrel. Both benchmarks saw an increase of over 3% from the previous close. Despite the fact that there was a modest retreat in prices later in the day.
A Closer Look At Hamas vs Israel
Israel faced the deadliest attack this week. This is the most significant attack on Israel in recent years. Eventually, it led to the surge in oil prices. This unfortunate event began in the early hours of a fateful Saturday. Hamas fighters made their way into Israel through land, sea, and even air, launching attacks on various Israeli towns. Israel’s response was swift, with a series of airstrikes targeting Gaza. Prime Minister Benjamin Netanyahu didn’t mince words, declaring war on Hamas and promising a “mighty vengeance” against the group.
The human cost of this conflict has been staggering. Reports suggest that over a thousand people have lost their lives in this latest flare-up. Not just that. Gaza kidnapped dozens of Israelis and took them as hostage.
The Global Ripple Effect
The geopolitical unrest in the Middle East has always had a direct correlation with oil prices, and this instance was no different. The deteriorating security situation in the region made oil prices vulnerable, leading to wild price swings. Analysts from ANZ Bank weighed in on the situation and stated, “Increasing geopolitical risk in the Middle East should support oil prices… higher volatility can be expected.”
But the repercussions of the Israel-Hamas clash aren’t limited to just the immediate region. Goldman Sachs analysts pointed out two potential global consequences. Firstly, the ongoing events might delay the normalization efforts between Israel and Saudi Arabia, which had been progressing with U.S. involvement. Secondly, Iran’s role in the Hamas attack has cast a shadow on the future outlook for Iranian oil supply, signaling potential challenges ahead.
A Silver Lining?
While the skyrocket of oil prices spells concern for many, especially oil-importing nations, there might be a silver lining. A report from the Wall Street Journal indicated that Saudi Arabia might consider rolling back production cuts next year if prices soar too high. This sentiment, expressed by Saudi and U.S. officials, marks a significant shift from Riyadh’s previous stance on U.S. calls for increased oil production.