Brent and West Texas Intermediate crude prices jump after Hamas attack on Israel

Oil prices jumped 4% as the conflict between Israel and Hamas continued for a third day following a surprise attack on Israel by Palestinian militants Hamas.

Global benchmark Brent crude traded 4.53% higher at $88.41 a barrel on Monday, while US West Texas Intermediate crude futures rose 4.69% to $88.67 a barrel.

At dawn on Saturday during a major Jewish holiday, the armed Palestinian movement Hamas launched a multi-pronged infiltration operation into Israel – by land, sea and air using gliders. The attack came hours after thousands of rockets were fired from Gaza at Israel.

At the time of publication, there were at least 700 Israelis He was reportedly killed, according to what was reported by NBC News. the Palestinian Ministry of HealthWhile 313 deaths have been recorded so far.

While there is a rise in crude oil prices, analysts believe it will be a knee-jerk reaction, and likely temporary.

“For this conflict to have a lasting and meaningful impact on oil markets, there must be a sustained reduction in oil supply or transport,” said Vivek Dhar, director of mining and energy commodities research at the Commonwealth Bank.

“Otherwise, as history has shown, a positive reaction to oil prices tends to be temporary and can easily be outweighed by other market forces,” he wrote in a daily note. He added that the conflict does not directly endanger any major source of oil supplies.

Neither party is considered a major player in the oil field. Israel owns two oil refineries with a total capacity of about 300,000 barrels per day. According to the US Energy Information AdministrationThe country boasts “virtually no crude oil and condensate production.” Likewise, the Palestinian territories do not produce any oil The environmental impact assessment is shown.

However, the conflict is located on the cusp of a major region for producing and exporting oil to global consumers.

Oil-rich Iran is a major concern for the market.

“If Western countries officially link Iranian intelligence to the Hamas attack, Iranian oil supplies and exports face imminent downside risks,” Dhar said.

Oil exports from Iran have been limited since former US President Donald Trump in 2018 exited the nuclear agreement and reimposed sanctions with the aim of reducing revenues for Tehran.

“With encouragement from the United States and secret nuclear talks, Iran has seen its exports and oil production grow by about 600,000 barrels per day to 3.2 million barrels between the end of 2022 and mid-2023,” Siti said in a note.

There are fears that the conflict will spread to the region.

“There is also a risk of conflict escalating at the regional level,” Henning Gloystein, director of energy, climate and resources at the Eurasia Group, told CNBC. “If Iran is drawn into it, there could also be supply issues, although we are not there yet.” e-mail.

The Lebanese Hezbollah group said it launched attacks on three sites in the Shebaa Farms – a strip of land located at the intersection of the Lebanese-Syrian border and the Israeli-occupied Golan Heights.

Josh Young, IT director at energy investment firm Bison Interests, said there could be a “very significant impact on the oil market” if the United States imposes sanctions on Iranian exports. “I think it’s appropriate to see oil, let’s say, [up] About $5 for WTI.”

With 40% of global exports passing through the Strait of Hormuz, Bob McNally, president of Rapidan Energy Group, expects the conflict between Israel and Iran to easily cause oil prices to rise by $5 to $10. It is considered a strait The most important oil transit corridor in the worldIt is located between Oman and Iran.

However, investors should not just keep an eye on Iran.

McNally also told CNBC’s “Street Signs Asia” that crude oil prices could rise “much higher” if the Lebanese militant group Hezbollah is involved.

“The way this becomes a real problem for the oil market and contributes to a much larger rally is for the market to believe that the fighting will spill over to Hezbollah in Lebanon,” he said.

US Secretary of State Antony Blinken on Sunday referred to “limited gunfire” between Lebanese Hezbollah and Israel, but said, “So far, this is quiet, but we are monitoring it very carefully.”