In the days since Hamas brutally attacked Israel, prompting a fierce and violent response from Israel, oil prices have spiked, with many investors afraid of what the conflict could mean for access to oil across the world.
Yet, market analyst have said that the increase would likely only be temporary, unless the conflict expands to include other countries and territories in the Middle East, which would affect some of the world’s leading oil producers.
The U.S. benchmark WTI crude increased on Monday about 4.5%, up to about $86.50 per barrel. The global benchmark, known as Brent crude, increased a little more than 4%, reaching $88 a barrel.
That marks a stark reversal of where oil prices were going, as they were dropping considerably until Hamas – a terrorist organization based in the Gaza Strip – launched its coordinated, violent and brutal attack on Israel this past weekend.
The attacks have led to more than 1,200 people being killed and hundreds more being injured in Israel, and close to 1,000 more people being killed in Palestine in the retaliatory attacks from Israel.
Dan Dicker, a strategist who has followed the energy and oil markets for a long time, said that the spike in oil prices was likely just a “knee-jerk reaction” to the immediate uncertainty and fear surrounding the violent situation. He said he believed prices would subside soon and then continue on its decreasing trend.
He pointed to the winter coming up, a time of year where demand drops, which causes oil prices to decline.
As he said in a recent interview with The Washington Times:
“The knee-jerk reaction is some fear, if you’re in the market and unsure of some sort of geopolitical domino effect. I don’t expect [the fighting] to become wider, and it doesn’t affect any oil centers.”
Israel and Palestine aren’t big oil-producing countries to begin with, which is part of the reason why the sudden rise in oil prices is likely to be temporary. It’s only if the conflict expands to other oil-producing countries – such as Saudi Arabia – that long-term fears about price increases could become reality.
On Monday, the average price of a gallon of regular gas in the U.S. was $3.70. That’s a drop from the $3.82 mark it was at one month ago.
Patrick De Haan, the founder of the app GasBuddy, which monitors fuel prices, said that the increased oil prices aren’t going to stay around for long, unless Iran and other countries or groups are drawn into the conflict.
Iran has long been thought to fund Hamas, and it’s also a member of OPEC.
As De Haan wrote on X recently:
“Oil hates turmoil, but if the violence does not spill over into other areas, it should not worsen. For now, [a barrel of] oil in the short term may hold into the $80s, but until the national average drops into the $3.30s, we’re at very, very low risk of any upward move in gasoline prices.”
