Israel-Hamas Conflict: Crude oil prices surge over fears of supply cuts

Oil prices rallied on Monday after Hamas launched a shock attack on Israel at the weekend, which has sparked fresh concerns about tensions in the Middle East.

The crisis has led to concerns about supplies of crude from the Middle-East region, which is coming after supply worries were already high owing to Saudi Arabia and Russia’s output cuts.

According to analysts, this has also renewed fears about the impact on inflation, with energy costs a key driver of spiking prices.

Ripples Nigeria reports that the surprise attack and Israel’s declaration of war in response, have left more than 1,000 dead and raised concerns that a potential broadening of the conflict could draw in the United States and Iran.

“Key for markets is whether the conflict remains contained or spreads to involve other regions, particularly Saudi Arabia,” Brian Martin and Daniel Hynes of ANZ Group said.

Read also: US govt confirms 9 Americans killed in Hamas attacks

“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.”

SPI Asset Management’s Stephen Innes, however warned: “Historical analysis suggests that oil prices tend to experience sustained gains after the Middle East crises.

“Meanwhile, stocks tend to eventually recover and trend higher after an initial period of volatility. Safe-haven assets like gold and Treasury, which initially see gains during such crises, tend to fade from their initial price spikes as the situation stabilises.

“But with Middle East analysts considering this to be a pivotal moment for Israel, the view looks incendiary in any current scenario.”

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