“Immediate and spontaneous spike”: Oil Analysts Anticipate the Market Consequences of the Israel-Hamas Conflict.
- Category: News
Energy experts, speaking to CNBC, have suggested that the crude oil market may experience a significant surge on Monday, owing to the ongoing conflict between Israel-Hamas (Palestinian militant group). However, they emphasize that the overall impact on the oil market is likely to be contained unless the situation escalates further.
Vandana Hari, CEO of Vanda Insights, conveyed her insights via email to CNBC, stating, “We may see a knee-jerk surge in crude prices when markets open on Monday. There will be some risk premium factored in as a default, until the market is satisfied that the event is not setting off a chain reaction, and Mideast oil and gas supplies won’t be affected.”
Over the weekend, Hamas militants, designated as a terrorist organization by the U.S., European Union, and the U.K., initiated a multi-pronged attack on Israel during a major Jewish holiday, following the firing of thousands of rockets into Israel from Gaza.
Israeli Prime Minister Benjamin Netanyahu has declared an offensive phase, vowing to continue without limitations or respite until objectives are achieved. Israel has also cut off the supply of electricity, fuel, and goods to the Gaza Strip, home to 2.3 million Palestinians. As of the time of this report, there have been casualties on both sides, with reports of civilians, including women, children, and the elderly, being affected.
How much Oil is Involved?
While neither Israel nor Palestine are significant oil producers, experts caution that the conflict’s location in a key oil-producing region presents potential risks.
Vandana Hari highlighted that while the Israel-Hamas conflict does not directly impact oil production or supply, it remains “on the doorstep of an important oil-producing and exporting region.” Israel possesses two oil refineries with a combined capacity of nearly 300,000 barrels per day, but it has minimal crude oil production, according to the U.S. Energy Information Administration (EIA). The Palestinian territories do not produce oil, as per EIA data.
Israel-Hamas Conflict: Israel’s Strike on Gaza Strip
Thoughts of Oil Leaders
Iman Nasseri, Middle East managing director of energy consultancy Facts Global Energy, emphasized that the impact on oil prices will likely stay limited unless the conflict rapidly escalates into a regional war involving direct involvement from the U.S., Iran, and other party supporters.
French businessman and hedge fund manager Pierre Andurand echoed this sentiment, noting that the Levant region is not a major oil-producing area. While he does not anticipate a substantial oil price spike in the coming days, he acknowledged the potential for an impact on supply and prices over time.
As the situation continues to unfold, the energy market will closely monitor developments in the Israel-Hamas conflict for any potential shifts in oil prices and regional stability.
