As investors watch to see if the Israel-Hamas conflict involves other nations, a development that could potentially drive up prices further and deal a fresh blow to the global economy, oil traded mostly flat on Monday after soaring last week.
At 04:19 GMT, the price of Brent futures was unchanged at $90.89 per barrel. U. S. price of West Texas Intermediate (WTI) crude dropped by 2 cents to $87.67 per barrel.
Due to investors factoring in the possibility of a wider Middle East conflict, both benchmarks experienced their highest daily percentage gains since April on Friday, rising by nearly 6 percent.
WTI rose 5.9 percent while Brent advanced 7.5% for the week.
“Investors are trying to figure out the impact of the conflict while a large-scale ground assault has not begun after the 24-hour deadline that Israel first notified residents of the northern half of Gaza to flee to the south,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
“The impact that may involve oil-producing countries has been factored into the prices to some extent, but if an actual ground invasion were to occur and have an impact on oil supply, the prices could easily exceed $100 a barrel,” he said.
Because Israel is not a major producer, the Middle East conflict has not had a significant impact on the world’s oil and gas supplies.
But amid worries about any potential escalation involving Iran, the conflict between Israel and the Islamist organization Hamas represents one of the greatest geopolitical risks to oil markets since Russia’s invasion of Ukraine last year.
Market participants are analyzing the potential effects of a larger conflict on supplies from nations in the top oil-producing region of the world, such as Saudi Arabia, Iran, and the United Arab Emirates.
If Tehran is discovered to have been directly involved in the Hamas attack, the U.S. S. Vivek Dhar, an analyst at the Commonwealth Bank of Australia, said in a note on Monday that the United States should fully enforce its sanctions against Iran’s oil exports.
“The U.S. has turned a blind eye on its sanctions on Iran’s oil exports this year as it looked to improve diplomatic ties with Iran,” he said.
“The 0.5-1 million barrels per day increase in Iran’s oil exports this year – equivalent to 0.5-1% of global oil supply – is at risk of being sidelined if U.S. sanctions are enforced in full.”
Recall on Sunday, Israeli Prime Minister Benjamin Netanyahu vowed to “demolish Hamas” as his troops prepared to enter Gaza in search of Hamas militants whose deadly rampage through Israeli border towns shocked the entire world.
Iran issued a warning on Saturday, saying that if Israel’s “war crimes and genocide” are not stopped, things could get out of hand and have “far-reaching consequences.”
The U.S. is concerned that the conflict will worsen. Following several days of shuttle diplomacy among Arab nations, Secretary of State Antony Blinken will visit Israel again on Monday to discuss “the way forward.”
The US, attempting to plug gaps in the system set up to punish Moscow for its invasion of Ukraine, the G7 last week imposed the first sanctions on owners of tankers carrying Russian oil priced higher than the G7’s price cap of $60 a barrel.
One of the top exporters of crude oil is Russia, and the tighter US supply could be limited if its shipments are scrutinized.
