War in Israel Will Have Long Term Impact on Oil Market, Analysts Say
Fighting Intensifies, as Israel Pelts Gaza With Rockets
Overt Operator
October 10, 2023
Oil prices experienced a significant climb on Monday, October 9, amidst growing concerns about crude supplies following a surprise attack by Hamas on Israel over the weekend.
The energy market was left on edge after The Wall Street Journal reported that Iranian security officials had assisted Hamas in planning the attacks, which resulted in a devastating loss of lives. Bloomberg reported that Citigroup Inc has estimated the war in Israel will have a "long term" impact on the oil market.
With approximately 1,008 casualties in Israel and nearly 750 in Gaza, Hamas also claimed to be holding over 130 captives, which Hamas has vowed to execute. Many of these civilians were citizens of foreign governments. The death toll of American citizens rose to nine, at the time of this report. Nations such as Germany attempted to determine how many of their citizens had been captured in the attack, the Associated Press reported on Tuesday, October 10.
At the time of this report, Israel pressed into the Gaza enclave with fierce rocket attacks.
The involvement of Iran in these attacks has intensified worries over potential sanctions on the country's crude exports, which have been steadily approaching pre-2018 levels in recent months.
The surge in oil prices was evident as trading opened on Sunday, with prices skyrocketing by over 4%. This increase was driven by the apprehension that confirmation of Iran's involvement would lead to sanctions, ultimately impacting the global supply of crude oil.
Last month, oil prices experienced a decline after Brent approached the $100-a-barrel threshold, while WTI briefly surpassed $95 a barrel for the first time in over a year.
Analysts reportedly estimate that Iranian crude production currently exceeds 3 million barrels per day, with exports surpassing 2 million barrels per day. These levels haven't been seen since the United States withdrew from the Iranian nuclear accord in 2018. In 2020, sales plummeted to approximately 400,000 barrels per day due to reimposed U.S. sanctions.
However, the duration of this impact remains uncertain. Morse draws attention to the historical significance of the timing of the attacks, coinciding with the 50th anniversary of the Yom Kippur War in October 1973. This war had a profound effect on oil prices and transformed the global oil and product markets.
The attacks have cast doubt on any potential Saudi/Israeli reconciliation, as well as the likelihood of Saudi Arabia reducing or eliminating its additional 1 million barrels per day of crude production.
The surprise Hamas attacks on Israel have sent shock waves through the energy market, causing oil prices to surge. Traders are closely monitoring the implications of these attacks on crude supplies, particularly with concerns about potential sanctions on Iran's crude exports. As the situation unfolds, the energy market remains highly volatile, with the potential for long-lasting effects on global oil and product markets