The recent attack on Israel by Hamas has caused a sharp increase in oil prices, as traders closely monitor how the conflict will impact oil production and transportation in the Middle East. Over the weekend, oil prices rose due to the uncertainty surrounding the situation in Israel. The attack by Hamas caused prices to spike even further, partially reversing the significant decrease in oil prices from the previous week. Defense stocks also experienced a rise as a result of the attack.
The ongoing conflict between Israel and Hamas has led to a surge in global oil prices. With over 1,100 deaths reported so far, the escalating violence has heightened concerns about the stability of oil production in the Middle East. The unexpected attack by Hamas on Israel caused oil prices to jump nearly 4% on Monday morning, as fears grew that the conflict could lead to a broader disruption in the region.
The unrest in the Middle East has also raised fears that oil production could be disrupted. Energy companies saw a boost in stock prices following the news, with companies like Exon Mobile and Occidental Petroleum experiencing significant increases.[0] In addition to the impact on oil prices, the conflict also prompted Israel's central bank to sell off $30 billion of foreign reserves to support the struggling shekel, which reached its lowest level against the dollar since 2016.[1]
The attacks by Hamas over the weekend have not only affected international crude prices but also those in the United States. There are concerns that a wider conflict could draw in major oil producers such as Iran or Saudi Arabia, potentially threatening oil supply. These fears have led to a spike in both international and US crude prices, as investors anticipate the potential disruption to oil markets.
The situation remains fluid, and much depends on how Israel responds to Hamas and Iran, which is believed to have influence over the Palestinian group. However, some tentative conclusions can be drawn.[2] Arab countries are not attacking Israel in unison, with Egypt, Jordan, Syria, Saudi Arabia, and others observing the events from the sidelines rather than actively shaping them.[2]
The situation in Israel could also have repercussions for Iranian oil production. Starting in late 2022, Washington has chosen to ignore the increasing Iranian oil exports, disregarding the American sanctions.[2] If Israel concludes that Hamas acted on Iran's instructions, it could lead to the enforcement of sanctions by the US, potentially pushing oil prices to $100 a barrel or even higher.[2] Additionally, if Iran finds itself under attack from Israel or the US, it could retaliate by disrupting oil production, as it demonstrated in 2019 through Yemeni proxies.[2]
While Israel itself does not produce oil, concerns are growing that the conflict could exacerbate uncertainty in the region and impact major producers like Iran and Saudi Arabia. If it emerges that Iran aided Hamas in the attack, there could be further sanctions imposed on Iran.[3] Additionally, the conflict may derail a potential deal to normalize relations between Israel and Saudi Arabia, which could have led to increased oil output from the latter.
The recent attack by Hamas on Israel has sparked fears of another full-blown conflict in the region. The Gaza-based militant group launched a surprise attack, resulting in the deaths of hundreds of Israelis and Palestinians.[1] As the conflict escalates, oil prices have risen, with Brent crude and West Texas Intermediate futures jumping around 4%. Natural gas prices have also surged over 10% after Israel ordered Chevron to halt production on a major natural gas platform.[4]
The parallels between the current situation and the oil crisis of October 1973 are easy to draw, with a surprise attack on Israel leading to rising oil prices.[5] However, the global economy is not expected to suffer another Arab oil embargo like in 1973.[5] Nevertheless, there is a possibility of higher oil prices in the long term.
The attack by Hamas has also had implications beyond the conflict itself. The Saudi-Israeli diplomatic deal that was expected in 2024 is now unlikely, and the Saudi-Iranian rapprochement has been disrupted.[2] These developments further contribute to the uncertainty surrounding oil markets.
Defense-related stocks saw significant increases following the attack. Companies like Lockheed Martin, Northrup Grumman, and General Dynamics experienced notable gains. On the international front, Elbit Systems, a major Israeli defense contractor, saw its stock decline.[4] Investors are concerned that the conflict could escalate into a broader conflict in the Middle East, leading to more instability in the region.[6]
In conclusion, the recent attack by Hamas on Israel has caused a sharp increase in oil prices and has led to concerns about the stability of oil production and transportation in the Middle East. The conflict has also had implications for defense stocks and has raised fears of a broader conflict in the region. The situation remains fluid, and it is uncertain how Israel will respond and how Iran will be involved. However, the potential impact on oil markets and the global economy is significant, and investors are closely monitoring the situation.
0. “Stocks tumble as Middle East conflict rattles markets: Stock market news today” Yahoo Finance, 9 Oct. 2023, https://finance.yahoo.com/news/stocks-tumble-as-middle-east-conflict-rattles-markets-stock-market-news-today-133337454.html
1. “Israel-Gaza war: Oil prices spike, Israel begins sell-off to support shekel” Al-Monitor, 9 Oct. 2023, https://www.al-monitor.com/originals/2023/10/israel-gaza-war-oil-prices-spike-israel-begins-sell-support-shekel
2. “Opinion: For Oil, Its Not 1973 Again But It Could Still Turn Ugly” NDTV, 7 Oct. 2023, https://www.ndtv.com/opinion/opinion-hamas-attack-on-israel-for-oil-its-not-1973-again-but-it-could-still-turn-ugly-4460596
3. “Oil price leaps and airline shares fall after Hamas attack on Israel” The Guardian, 9 Oct. 2023, https://www.theguardian.com/business/2023/oct/09/oil-price-arms-firms-shares-hamas-attack-on-israel-bae-systems
4. “Oil and gas prices surge after attack on Israel” The Washington Post, 9 Oct. 2023, https://www.washingtonpost.com/business/2023/10/09/oil-prices-israel-war
5. “For Oil, It's Not 1973 Again – But It Could Still Turn Ugly” Bloomberg, 7 Oct. 2023, https://www.bloomberg.com/opinion/articles/2023-10-07/hamas-attack-on-israel-for-oil-it-s-not-1973-but-it-could-still-turn-ugly
6. “Oil Prices, Defense Stocks Rise as Israel-Hamas Conflict Rattles Markets” The Wall Street Journal, 9 Oct. 2023, https://www.wsj.com/finance/stocks/global-stocks-markets-dow-news-10-09-2023-60aacfcd
