The bloody conflict between Israel and Hamas militants immediately sent the price of oil upwards, even as Russia eliminated a supply chain barrier.
“Israel is a very marginal oil producer, and so recent developments will have little direct impact on oil supply,” ING Group analyst Warren Patterson reportedly said. “However, given the rising tension in the region and the risk that the conflict could spread, market participants will remain nervous until there is a clear de-escalation.”
Russia recently restored seaborne oil exports after the ban and reduced OPEC+ output roiled the markets. In August, exports reportedly reached their lowest threshold since September 2022. But as of Oct. 1, 2023, a three-month high appeared to provide gas and diesel fuel cost relief as the ban was lifted. Owner-operators and freight carriers who were counting their blessings on lower fuel expenses may want to check their optimism. That’s largely because the attacks on Israel and declaration of war impacted per-barrel oil prices.
Although Israel and Palestine do not substantially contribute to the global supply of crude oil, tensions in the Middle East are running high. New reports have indicated that Iran partnered with Hamas militants to orchestrate the surprise Simchat Torah attacks that killed more than 1,000 and wounded far more. Foreign policy hawks suggest that as a primary ally to Israel, the U.S. would have no choice but to clamp down and sanction Iranian oil exports if early reports hold true. Iran has officially denied any involvement in the attacks.
“It would be difficult to see the U.S. maintaining this stance if Iran is connected to these attacks, whether directly or indirectly,” Patterson reportedly said.
A knee-jerk reaction to another war in the Middle East caused Brent crude and West Texas Intermediate to promptly rise by 4 percent, $88 and $84.50 per barrel, respectively. Israel also instructed Chevron to shutter natural gas production at a central offshore platform due to safety concerns.
Militants from neighboring Lebanon have also reportedly entered the fray, exacerbating fears of escalating violence. Industry insiders appear more concerned that the war could spread throughout the region, disrupting production, refinement, and distribution.
The price per barrel edged up to nearly $90 by the end of Monday, Oct. 9, and could inch its way to $100 should the conflict spread or Draconian sanctions come into play. Foreign wars continue to affect independent U.S. truckers and freight transportation companies with uneven diesel prices at the pump.
https://www.politico.com/news/2023/10/08/israel-oil-energy-saudi-iran-00120563
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