Oil Prices Soar Amidst Tensions:
Oil prices experienced a substantial surge, rising by about 5% during trading on Friday, influenced by the ongoing Israeli-Hamas conflict and the US enforcement of price caps on Russian crude oil exports.
Israeli-Hamas Conflict’s Role:
The spike in oil prices can be attributed to the ongoing conflict between Israel and Hamas. As Israel initiates counterattacks and issues warnings to residents in Gaza, concerns regarding the conflict’s escalation and potential involvement of other parties, including Iran, have heightened.
US Measures on Russian Exports:
Additionally, the market reacts to the US clampdown on Russian crude export prices. Last year, the G7 imposed price caps on Russian oil exports, intending to limit funds for Russia amidst its war against Ukraine.
G7’s Stance on Russian Oil Exports:
The G7 coalition reinforced its commitment to imposing sanctions and economic measures against Russia due to its involvement in an “illegal, unjustifiable, and unprovoked war”. The coalition identified vessels carrying Russian oil priced above the established $60 price cap.
Volatility Amidst Geopolitical Concerns:
Oil prices have demonstrated volatility this week due to heightened concerns regarding a broader conflict in the Middle East, especially following a significant assault on Israel. Speculations regarding Iran’s involvement intensified the market’s uncertainties, potentially impacting oil prices.
Impact on Oil Supply and Market Dynamics:
The anticipation of stricter sanctions on Russia and potential reductions in oil supplies contributes to the oil market’s response. If evidence links Iran to the recent conflict, this could lead to further escalation, impacting global oil prices.
OPEC+ Measures and Previous Quarter’s Performance:
The oil market experienced a 28% average rally in the last quarter, reaching a yearly high on Sept. 27. This surge was influenced by OPEC+ output cuts and supply restrictions from major oil-producing countries like Saudi Arabia and Russia, creating a market deficit.
In summary, the surge in oil prices is a result of a complex interplay between geopolitical tensions and global efforts to regulate oil supply and prices.