Oil prices moved in a narrow range, as Israel has not yet launched its expected ground attack on the Gaza Strip, while the United States intensified its efforts to prevent the crisis from turning into a large-scale regional war.
The price of Brent crude settled below $91 per barrel, after rising by about 6% on Friday, recording a significant weekly gain. Over the weekend, American officials rushed to hold talks with Middle Eastern countries — including unannounced meetings with Iran — to contain the conflict. US Secretary of State, Anthony Blinken, is scheduled to make a new visit to Israel on Monday, while US President Joe Biden is also studying the possibility of making a trip there in the coming days.
The oil market faces the shock of war
The global crude oil market was shocked by the events following the initial attack by Hamas against Israel, and fears were raised about the involvement of other countries in the conflict, especially Iran. Crude oil flows from the Middle East could be at serious risk if they are destabilized or the fighting escalates. The region's supplies represent about a third of global supply, raising the risk of market tightening.
How is the global oil market affected by the conflict between Israel and Palestine?
Han Zhongliang, investment strategist at Standard Chartered Bank, explained that throughout history, Middle East conflicts have rarely led to a sustained rise in oil prices, when they do not disrupt supplies. In the current crisis, there is a limited risk of both direct and indirect supply disruptions.
Blinken is scheduled to return to Israel on Monday, after talks with Arab officials, including Saudi Arabia (leader of the OPEC+ alliance). Earlier, Iranian Foreign Minister Hossein Amir Abdollahian warned that the risk of the conflict spreading may materialize on the ground if Israel continues its attack. Tehran is considered the main supporter of Hamas, and also supports the Hezbollah group in southern Lebanon.
The Middle East is preparing for a new battle
The Biden administration has also increased the US military presence in the region, with thousands of Israeli troops massing near Gaza. The USS Eisenhower carrier strike group was sent to the eastern Mediterranean to join the USS Gerald Ford, which was sent shortly after the Hamas attack.
Will oil prices rise if the attack on Gaza lasts?
On the other hand, the price differences associated with the duration of crude oil contracts continue to increase in the near term, as the margin between the two nearest Brent crude contracts reaches $1.57 per barrel in the case of backorder . , compared to 89 cents about a month ago, as Saudi Arabia and Russia (the two influential countries within the OPEC+ alliance) maintained production restrictions, which led to a decline in supplies in the market.
