Crude oil prices could experience a temporary surge due to the recent attack on Israel by Palestinian militants
According to energy experts, the overall impact of the attack on Israel by Palestinian militants Hamas is likely to be limited, assuming the conflict does not escalate further.
Vandana Hari, CEO of Vanda Insights, stated that there might be a sudden increase in crude oil prices when the markets open on Monday. However, she also mentioned that there will be a risk premium in place until it is clear that the event will not disrupt oil and gas supplies in the Middle East.
Militants from Hamas managed to infiltrate Israel through land, sea, and air during a major Jewish holiday. This came after the firing of thousands of rockets into Israel from Gaza by the Islamist militants.
Israeli Prime Minister Benjamin Netanyahu reported that civilians, including women, children, and the elderly, have been abducted or killed in their homes.
Israel has initiated the offensive phase and intends to continue until its objectives are achieved, according to Netanyahu. He also stated that Israel will impose severe consequences on its enemies within the Gaza Strip.
Israel has cut off the supply of electricity, fuel, and goods to the Gaza Strip, where 2.3 million Palestinians reside.
As of now, NBC News has reported at least 250 Israelis killed and over 1,860 injured, with 320 in serious condition. The Palestinian Health Ministry recorded 256 deaths and 1,790 injuries in Gaza.
How much oil is involved?
Although neither Israel nor Palestine are major oil players, analysts caution that the conflict is situated in an important oil-producing region and has the potential to escalate further.
Hari noted that while the conflict does not directly impact oil production or supply, it is still located near a significant oil-producing and exporting region.
Israel possesses two oil refineries with a combined capacity of almost 300,000 barrels per day. However, the country has minimal crude oil and condensate production. On the other hand, the Palestinian territories do not produce any oil, according to data from the U.S. Energy Information Administration (EIA).
Other market watchers, such as Iman Nasseri from energy consultancy Facts Global Energy and French businessman Pierre Andurand, share similar sentiments. They believe that the impact on oil prices will be limited unless the conflict escalates into a regional war involving the U.S., Iran, and other supporters of the parties involved.
Andurand also mentioned that while the Levant region is not a major oil producer, the war could eventually affect oil supply and prices due to low global oil inventories and production cuts by Saudi Arabia and Russia.
Hari warned that the ongoing Israeli-Palestinian conflict has the potential to escalate into regional hostilities. Recent attacks by Lebanon’s Hezbollah militant group on Israeli sites further contribute to the tense situation.