Oil prices soar on supply concerns as Middle East conflict escalates
Investing.com — Oil prices climbed sharply Monday as the escalating violence in the Middle East raised concerns about the security of future crude supply.
By 04:45 ET (08.45 GMT), the U.S. crude futures traded 3.1% higher at $85.33 a barrel, while the Brent contract climbed 2.8% to $86.92 a barrel.
The Israeli-Palestinian conflict escalated to full-blown war over the weekend, as members of the Islamist group Hamas attacked several Israeli towns, killing hundreds of Israelis and triggering a wave of retaliatory Israeli air strikes on Gaza that have also resulted in many deaths.
While the current scope of the conflict has no direct impact on global oil supply, prices are rising because of worries that neighboring countries will be dragged in.
The Wall Street Journal reported that Iranian security officials helped Hamas plan its attack on Israel in a series of meetings over months, something denied by Iran's mission to the United Nations on Sunday.
Washington has taken a softer stance to the Iranian oil embargo over the course of the year, attempting to smooth relations with Iran as part of an attempt to find a regional peace deal and amid concerns over rising oil prices.
However, a tighter enforcement of sanctions is a possible response if a link to Tehran is established.
“Enforcing these sanctions more strictly would mean the potential loss of at least 500Mbbls/d,” analysts at ING said, in a note. “If this loss materializes, the surplus we currently forecast in 1Q24 would largely disappear, leaving the market roughly in balance early next year. For the remainder of 2024, we would see deeper deficits, particularly over 2H24. Under this scenario, there would be some upside risk to our current Brent forecast of US$90/bbl
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