Crude oil storage tanks are seen in an aerial photo at the Cushing Oil Center in Cushing, Oklahoma, on April 21, 2020. REUTERS/Drone Base/File Photo Obtaining licensing rights
TOKYO (Reuters) – Oil prices were mostly flat on Monday after rising last week as investors waited to see whether the conflict between Israel and Hamas would attract other countries, a development that could push prices higher and deal a new blow to the global economy. International Economy.
At 0419 GMT, Brent crude futures settled at $90.89 per barrel. US West Texas Intermediate crude fell two years to $87.67 per barrel.
The two benchmarks rose about six percent on Friday, recording their highest daily percentage gains since April, as investors appreciated the possibility of a broader conflict in the Middle East.
Over the course of the week, Brent advanced 7.5% while WTI rose 5.9%.
“Investors are trying to figure out the impact of the conflict while the large-scale ground offensive has not begun after the 24-hour deadline in which Israel told residents of the northern half of Gaza for the first time to flee to the south,” Hiroyuki Kikukawa said. Chairman of NS Trading, a unit of Nissan Securities.
“The impact that could include oil-producing countries has been factored in to some extent in prices, but if an actual ground invasion occurred and had an impact on oil supplies, prices could easily exceed $100 per barrel,” he said.
The conflict in the Middle East has had little impact on global oil and gas supplies, and Israel is not a major producer.
But the war between the Islamic Hamas movement and Israel poses one of the most important geopolitical risks to oil markets since the Russian invasion of Ukraine last year, amid concerns about any potential escalation involving Iran.
Market participants are assessing what a broader conflict might mean for supplies from countries in the world’s largest oil-producing region, including Saudi Arabia, Iran and the United Arab Emirates.
If Tehran is found to be directly involved in the Hamas attack, it would likely lead to the United States fully implementing its sanctions on Iranian oil exports, Vivek Dhar, an analyst at the Commonwealth Bank of Australia, said in a note on Monday.
He added, “The United States turned a blind eye to the sanctions it imposed on Iranian oil exports this year as part of its aspiration to improve diplomatic relations with Iran.”
“The 0.5 to 1 million barrels per day increase in Iranian oil exports this year – equivalent to 0.5 to 1% of global oil supplies – is at risk of being marginalized if US sanctions are fully implemented.”
Israeli Prime Minister Benjamin Netanyahu vowed Sunday to “destroy Hamas” as his forces prepared to move into the Gaza Strip to pursue Hamas activists who shocked the world with their deadly attack through Israeli border towns.
Iran warned on Saturday that if Israel’s “war crimes and genocide” were not stopped, the situation could spiral out of control with “far-reaching consequences.”
As fears of conflict mount, US Secretary of State Antony Blinken will return to Israel on Monday to talk “about the way forward” after several days of shuttle diplomacy between Arab countries.
Last week, the United States imposed the first sanctions on the owners of tankers carrying Russian oil at prices above the G7 price ceiling of $60 per barrel, in an attempt to plug loopholes in the mechanism designed to punish Moscow for its invasion of Ukraine.
Russia is one of the world’s largest exporters of crude oil, and heightened US scrutiny of its shipments could reduce supplies.
(Reporting by Yuka Obayashi in Tokyo and Emily Chow – Preparing by Mohammed for the Arabic Bulletin) Editing by Sonali Paul and Edwina Gibbs
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