Oil Prices Hike Following Israel-Palestine War
Israel-Palestine war. On worries that the situation in Israel and Gaza would stymie Middle Eastern production, oil prices have increased.
The price of US prices increased along with the worldwide benchmark Brent crude, which increased by $2.50 a barrel to $87.05.
Although neither Israel nor the Palestinian territories are oil producers, the Middle East accounts for roughly one-third of the world’s supply.
The attack by Hamas on Israel marked the greatest escalation between the two sides in recent memory.
The attacks were denounced by Western governments. A representative for the Palestinian terrorist organization Hamas told the BBC that Iran, one of the world’s major oil exporters, had directly supported the group’s decision.
At a Sunday UN Security Council meeting in New York, Iran denied being involved in the assault, according to Reuters. Ebrahim Raisi, the president of Iran, has, nevertheless, stated that he supports the strike.
Global oil prices have increased, according to energy researcher Saul Kavonic, who told the BBC that this is “due to the prospect of a wider conflagration that could spread to nearby major oil-producing nations such as Iran and Saudi Arabia”.
West Texas Intermediate crude, the US benchmark price, was up $2.70 a barrel at $85.50 on Monday morning.
“If the conflict envelops Iran, which has been accused of supporting the Hamas attacks, up to 3% of global oil supply is at risk,” Mr. Kavonic stated.
According to Caroline Bain, head of Capital Economics’ commodities division, Iran has been producing more oil this year despite US sanctions, she told the BBC’s Today program.
“The US seems to have turned a blind eye to a steady increase in Iranian production, that… is going to be more difficult for the US to ignore going forward from here,” she stated.
Overall, Ms. Bain stated that Capital Economics anticipated that there would be a surplus of demand for oil in the latter three months of the year, which “should support higher prices.”
According to Mr. Kavonic, a fifth of the world’s supply would be “held hostage” if the Strait of Hormuz, a crucial oil trading route, is blocked.
Israel’s central bank announced on Monday that it would sell up to $30 billion worth of foreign currency in an effort to stabilize the markets and strengthen the shekel, the nation’s own currency, which has plummeted dramatically.
There is some trepidation at this point. Particularly in regards to economic statistics and developments linked to geopolitical uncertainties, [investors] want to see a little more clarity, according to Mr. Cheo.
Oil prices rose after Russia’s invasion of Ukraine in February 2022, reaching more than $120 a barrel in June of the previous year.
In May of this year, they retreated to just over $70 a barrel, but since then, as producers have worked to limit supply to maintain the market, they have slowly rebounded.
