Oil surges as Hamas’ attack on Israel seen inflaming tensions in Middle East

Oil surged as much as 5 percent after the broadest and bloodiest attack on Israel in decades threatened to inflame tensions in the Middle East, the source of around a third of the world’s crude.

The latest events in Israel don’t pose an immediate threat to oil flows, but there’s a risk the conflict could spiral into a more devastating proxy war, embroiling the US and Iran. Any retaliation against Tehran amid reports it was involved in the attacks could endanger the passage of vessels through the Strait of Hormuz, a vital conduit that Iran has previously threatened to close.

WTI and global benchmark Brent futures had plummeted this month—dropping by around $10 a barrel before the attack on Israel—as worries about high interest rates and slowing growth clouded the demand outlook. Those fears overshadowed bullishness that spurred a sharp rally in the third quarter as physical balances tightened due to prolonged Saudi-led crude output cuts.

The attacks come after months of easing tension between Washington and Tehran, with crude shipments from Iran rebounding to a five-year high with America’s tacit blessing. In an extreme scenario, Iran could retaliate and take aim at the Strait of Hormuz, should the Islamic Republic find itself in a corner. The waterway is essential for the movement of nearly 17 million barrels of crude and condensate each day.

Source: News Formal (newsformal.com)

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