Crude Oil Prices Jump 5% on Israel-Hamas War
Crude oil prices soared 5% on Monday as Hamas made a surprise attack on Israel during the weekend. West Texas Intermediate reached near $87 a barrel, up by $4.23 or 5.11 per cent while Brent crude traded at $88.76 a barrel with a rise of $4.18 or 4.94 per cent.
Analysts say the price hike is due to geopolitical unrest in the West Asia and supply side risks. Saudi Arabia has stepped back from its promise to increase oil output, citing the Hamas-Israel war.
The new development has also rattled Washington”s efforts to create bonhomie between Saudi Arabia and Israel. Earlier, it was reported that the Saudi Arabia would modify the relationship with Israel, with a defense deal in return from Washington.
As normalizing the ties with Israel, Saudi had also agreed to raise oil output from next year on wards. It would have helped mitigate supply side pressures resulting in a fall in crude oil prices which in turn help the countries to curb the inflationary pressures.
However, Hamas” attack on Israel has led to a surge in crude oil prices, which could add to inflationary pressures in countries around the world.
The conflict could also have a lasting impact on oil markets if it leads to a sustained reduction in oil supply or transport. However, experts say that this is unlikely to happen unless Western countries officially link Iranian intelligence to the Hamas attack.
The new rise in crude oil prices has come amid central banks rising interest rate causing growth and thus dip in demand. Brent and WTI had witnessed a $10 a barrel fall before Hamas-Israel initiate a war.
The rise in crude oil prices is a cause for concern, as it could add to inflationary pressures in countries around the world. However, it is too early to say whether the conflict will have a lasting impact on oil markets.
