Due to Hamas’ surprise attack on Israel, concerns over the supply of crude oil from the Middle East spread and international oil prices soared by more than 3%. ‘War risk’ is strengthening tensions in the global financial market, with investments flocking to ‘safe assets’ such as the dollar and gold.
On the 8th (local time) at the New York Mercantile Exchange (NYMEX), West Texas Intermediate (WTI) for November delivery soared more than 4% upon opening, reflecting investors’ concerns about the expansion of the Middle East war. It jumped up to 5% during the day and is currently trading at around $86.07, up 3.96%. On the London ICE Futures Exchange, Brent crude oil for December delivery also jumped by 4-5% and is currently showing an increase of around 3.6%.
Experts say that the immediate impact of the war between Israel and Hamas on oil prices will be limited. This is because neither Israel nor Palestine are oil-producing countries, and international oil prices have recently turned downward again amid concerns about an economic slowdown, falling to the price of a month ago.
The problem is that it may be prolonged and escalate into a proxy war between the United States and Iran. If Trump administration-style sanctions against Iran are reimposed following Iran’s withdrawal from the nuclear agreement in the past, Iran’s oil exports could fall sharply. As nuclear negotiations with the United States progress, Iran’s exports have jumped sharply from 600,000 barrels per day to more than 3 million barrels per day between 2022 and 2023.
“For this conflict to have a lasting and meaningful impact on the oil market, there must be a sustained decline in oil supply or transportation,” Vivek Dar, head of energy at Commonwealth Bank, said in a client note. “Otherwise, as history shows, there is no positive impact.” “Oil price reactions tend to be temporary and easily broken by other market factors,” he said. However, he added, “If Western countries officially link Iran to Hamas attacks, Iran’s oil supply will face the risk of falling sharply.” ANZ Holdings pointed out that “the biggest concern in the market is whether it will spread to other Middle East regions, including Saudi Arabia.”
Some analysts say that if the United States sends warships to the Middle East, Iran may threaten to close the Strait of Hormuz. The rise in tensions surrounding international oil prices is expected to increase uncertainty in the global economy in conjunction with the prolonged austerity measures led by the U.S. Federal Reserve (Fed).
Amid concerns of an escalation of war in the Middle East, there is also a trend toward ‘safe assets’ such as the dollar and gold. On this day, the dollar index, which shows the value of the dollar against major currencies, again exceeded 106 and continues its upward trend, and the yen-dollar exchange rate is also below 150 yen.
The New York stock market, which successfully rebounded on the 6th despite concerns about overheating of employment in the United States, is showing a downward trend ahead of Monday’s opening.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.