Oil experts expect knee jerk reaction in energy markets
Palestinian firemen extinguish a fire that was raging in a residential building destroyed by Israeli airstrikes in Gaza City on October 8, 2023.
Mohammed Abed | Afp | Getty Images
Crude oil prices could see a spike on Monday but the overall impact of the attack on Israel by Palestinian militants Hamas will likely be limited, energy experts told CNBC.
That’s provided the conflict does not escalate further, they said.
“We may see a knee-jerk surge in crude prices when markets open on Monday,” Vandana Hari, CEO of Vanda Insights, told CNBC via email.
“There will be some risk premium factored in as a default, until the market is satisfied that the event is not setting off a chain reaction and Mideast oil and gas supplies won’t be affected,” said Hari.
Militants from Hamas — designated by the U.S., European Union and the U.K. as a terrorist organization — infiltrated Israel by land, sea and air on Saturday, during a major Jewish holiday. The incursion came hours after the Islamist militants fired thousands of rockets into Israel from Gaza.
Civilians including women, children and the elderly have been abducted, and others killed in their homes, Israeli Prime Minister Benjamin Netanyahu said.
The impact on the oil price will be limited unless we see the ‘war’ between the two sides expand quickly to a regional war…
Iman Nasseri
Facts Global Energy
Israel has begun the offensive phase, and will “continue with neither limitations nor respite until the objectives are achieved,” Netanyahu said.
He vowed to “exact an immense price from the enemy, within the Gaza Strip as well.” Late Saturday, Israel cut off the supply of electricity, fuel and goods to the narrow strip where 2.3 million Palestinians live.
At the time of publication, there were at least 250 Israelis killed and more than 1,860 injured, including 320 in serious condition, NBC News reported. The Palestinian Healthy Ministry recorded 256 deaths and 1,790 injuries in Gaza.
How much oil is involved?
Both Israel and Palestine are not major oil players, but the conflict sits in a wider key oil producing region, analysts told CNBC, warning that it has the potential to conflagrate further.
Hari noted that while the conflict does not directly impact oil production or supply, it is still “on the doorstep of an important oil-producing and exporting region.”
Israel boasts two oil refineries with a combined capacity of almost 300,000 barrels per day. According to the U.S. Energy Information Administration (EIA), the country has “virtually no crude oil and condensate production.” The Palestinian territories produce no oil, data from EIA shows.
It has the potential to widen into regional hostilities.
Vandana Hari
CEO of Vanda Insights
Hari’s sentiments were echoed by other market watchers.
“The impact on the oil price will be limited unless we see the ‘war’ between the two sides expand quickly to a regional war where the U.S. and Iran and other supporters of the parties get directly involved,” Middle East managing…
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