In the aftermath of the severe military confrontations between Israel and the Palestinian group, Hamas, oil prices witnessed a significant surge in the Asian market.
Brent crude soared to $87.92 a barrel, marking an increase of almost 4%, whereas U.S. West Texas Intermediate crude experienced a rise of 4.16%, reaching $86.23 a barrel.
This weekend witnessed one of the most intense attacks from Hamas on Israel in many years, resulting in hundreds of Israeli casualties.
Israel retaliated with a series of air raids on Gaza.
The escalation in hostilities poses a significant challenge to the ongoing U.S. diplomatic endeavors aimed at fostering a positive relationship between Saudi Arabia and Israel.
A potential outcome of these efforts could have seen Saudi Arabia normalizing its ties with Israel, facilitated by a defense agreement between the U.S. and Riyadh.
Such a diplomatic breakthrough might have halted the budding diplomatic rapprochement between Saudi Arabia and its regional adversary, Iran.
ANZ Bank analysts remarked on the unfolding situation, saying, “Increasing geopolitical risk in the Middle East should support oil prices” and “higher volatility can be expected,” according to Reuters.
While Western nations have denounced the attacks, Iran and its ally in Lebanon, Hezbollah, have expressed their support for Hamas’s actions.
The international community is now speculating on Iran’s potential involvement, a sentiment echoed by Israeli claims.
Offering insight into the situation, Vivek Dhar from the Commonwealth Bank of Australia commented, “For this conflict to have a lasting and meaningful impact on oil markets, there must be a sustained reduction in oil supply or transport.”
He further emphasized the implications of potential findings linking Iran to the attack, noting, “If Western countries officially link Iranian intelligence to the Hamas attack, then Iran’s oil supply and exports face imminent downside risks.”
