Oil jumps on blazing Israel-Hamas conflict
2023-10-09
Summary:
Oil surged 4% due to the Israel-Hamas conflict escalating after a surprise Hamas attack on Israel. Israel declared war and started heavy airstrikes on Gaza.
Oil prices jumped 4% as the Israel-Hamas conflict has intensified following a surprise attack on Israel by Hamas. Israel formally declared war and began to pound Gaza.
Neither side is a major oil player. According to EIA, Israel boasts ‘virtually no crude oil and condensate production.’ By a similar strand, the Palestinian territories produce no oil.
However, a knee-jerk surge occurs as expected on concerns that the war could spill into the Middle East. The US is seeking to determine whether Iran was in on the weekend’s assault.
Energy experts said that the overall impact on energy prices could be limited if the conflict does not escalate further. Oil supply will hardly be impacted in the short term.
That complicates the US’s effort to normalise relations between Saudi Arabia and Israel. Saudi Arabia urged a peace solution to end the conflict and indicated its frustration with Israel.
Both Israel and Saudi Arabia are less likely to have room to manoeuvre on the question of the Palestinians, analysts said. Netanyahu’s far-right government had been worrying before the attack.
Oil has broken out of its recent trading range but fundamental backdrop is not enough to support a gradual rally at this point with RSI around 70 – a sign of overbought.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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