Israel-Palestine war: Oil soars as Hamas’ attack on Israel fans Middle East tensions

Oil surged more than 4 percent after Hamas’ surprise attacks on Israel over the weekend, the broadest and bloodiest in decades, threatened to inflame tensions in the Middle East, home to almost a third of global supply.

Bloomberg
Updated9 Oct 2023, 06:39 AM IST
People inspect the ruins of a building destroyed in Israeli strikes in Gaza City on October 8, 2023. (AFP)
People inspect the ruins of a building destroyed in Israeli strikes in Gaza City on October 8, 2023. (AFP)

Oil surged more than 4 percent after Hamas’ surprise attacks on Israel over the weekend, the broadest and bloodiest in decades, threatened to inflame tensions in the Middle East, home to almost a third of global supply.

West Texas Intermediate rose above $86 a barrel as a war-risk premium returned to markets. The combined death toll topped 1,100 as fighting headed into a third day, while the US said it was sending warships to the region. 

The latest events in Israel don’t pose an immediate threat to oil supply, but there’s a risk the conflict could spiral into a more devastating proxy war, embroiling the US and Iran. Any possible retaliation against Tehran amid reports the Islamic Republic was involved in the attacks could endanger the passage of vessels through the Strait of Hormuz, a vital conduit that Iran has previously threatened to close. 

Israel-Palestine war news LIVE:

“Key for markets is whether the conflict remains contained or spreads to involve other regions, particularly Saudi Arabia,” ANZ Group Holdings Ltd. analysts Brian Martin and Daniel Hynes said in a note. “Initially at least, it seems markets will assume the situation will remain limited in scope, duration, and oil-price consequences. But higher volatility can be expected.”

Also Read: Israel-Palestine war: How Hamas breached most advanced ‘Iron Dome’ with rocket attack

WTI and global benchmark Brent futures had plummeted this month — dropping by around $10 a barrel before the attack on Israel — as worries about high interest rates and slowing growth clouded the demand outlook. Those fears overshadowed bullishness that spurred a sharp rally in the third quarter as physical balances tightened due to prolonged Saudi-led crude output cuts.

Also Read: India is an important country in world, its support comes from understanding of terrorism: Israel

The focus will be on the wider fallout between Washington and Tehran after months of thawing relations, a rare prisoner swap and the freeing up of billions of dollars of frozen funds. While crude shipments from Iran have rebounded to a five-year high with America’s tacit blessing, the weekend’s hostilities could prompt the Biden administration to deal more aggressively with those flows, potentially crimping supplies and sending prices higher.

Also Read: Israel-Palestine war news: What is Hamas and what does it want?

In an extreme scenario, Iran could retaliate and take aim at the Strait of Hormuz, should the Islamic regime find itself in a corner. The waterway is essential for the movement of nearly 17 million barrels of crude and condensate each day, through which major oil-producing and OPEC members such as Saudi Arabia, Iraq and United Arab Emirates export crude.

“If Israel comes out and directly implicates Iran, we believe it will likely be difficult for the Biden administration to continue to adopt such a permissive sanctions regime,” RBC Capital Markets analyst including Helima Croft said in a note. “We anticipate that critics in Congress and elsewhere will contend that the White House is providing Iran with the financial wherewithal to sponsor such malign actors.”

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess
First Published:9 Oct 2023, 06:39 AM IST
HomeMarketsIsrael-Palestine war: Oil soars as Hamas’ attack on Israel fans Middle East tensions

Most Active Stocks

Tata Steel

157.75
03:43 PM | 19 JUL 2024
-8.6 (-5.17%)

Tata Power

414.15
03:59 PM | 19 JUL 2024
-15.85 (-3.69%)

Bharat Electronics

306.30
03:45 PM | 19 JUL 2024
-7.2 (-2.3%)

Zee Entertainment Enterprises

137.55
03:57 PM | 19 JUL 2024
-4.9 (-3.44%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Tata Teleservices Maharashtra

102.11
03:59 PM | 19 JUL 2024
4.68 (4.8%)

Rail Vikas Nigam

614.00
03:59 PM | 19 JUL 2024
27.65 (4.72%)

Jubilant Pharmova

752.25
03:43 PM | 19 JUL 2024
25.3 (3.48%)

One 97 Communications

458.70
03:55 PM | 19 JUL 2024
13.65 (3.07%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K
    Bangalore
    75,217.00292.00
    Chennai
    75,657.001,099.00
    Delhi
    74,485.00-659.00
    Kolkata
    74,485.00-73.00

    Fuel Price

    • Petrol
    • Diesel
    Bangalore
    102.86/L0.00
    Chennai
    100.75/L0.00
    Kolkata
    104.95/L0.00
    New Delhi
    94.72/L0.00
    OPEN IN APP
    HomeMarketsPremiumInstant LoanBudget