After Israel attack, oil prices now hinge on these five things
afr.comThe shock attack by Hamas and Israel’s response risk a wider destabilisation of the region – and the global oil market is watching.
There are sprawling questions about the geopolitical consequences of the conflict, which erupted 50 years after the Yom Kippur war that foreshadowed the 1970s oil crisis.
What does the latest escalation in the conflict between Hamas and Israel mean for the global oil market? AP
There is no suggestion that the fallout from the current situation will be comparable to what happened back then, but it could alter the geopolitical landscape of the Middle East in unpredictable ways. Israel has broadly pointed the finger at Iran following the attack. Tehran has denied involvement but President Ebrahim Raisi called it a “victory.”
Before the weekend, Saudi Arabia had been close to a deal with Israel that could have brought increased stability to the region. The US and Iran were engaged in broad but largely unacknowledged efforts to reach a kind of detente, and with it higher oil flows.
Many of the geopolitical considerations will hinge on how far Israel takes its response – particularly with regard to Iran. For now, these are the most immediate considerations for oil traders.
There is a widely held belief in the oil market that the US has turned something of a blind eye to sanctions on Iran’s oil flows, allowing shipments to soar in recent months.
That has helped keep a lid on oil prices in a market that has seen a huge loss of supply from Saudi Arabia, Russia and the rest of OPEC+.
People walking on the street in Tehran, Iran. Reuters
There is a chance that the US could take aim at this trade. The Islamic Republic currently sells the bulk of its crude exports to China, sending 1.5 million barrels a
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