Oil prices rose more than 5 percent on Monday after the Palestinian radical Islamic movement Hamas launched an offensive against Israel last weekend. The violence is raising concerns about the impact on supplies in the oil-rich region.
The price for a barrel of North Sea Brent oil rose 4.7 percent to $86.65 in early trading. A barrel of American WTI oil became 4.5 percent more expensive and costs $88.39. The price of gas also rose.
The events in Israel do not pose an immediate threat to oil supplies, says Bloombergbut there is a risk that the conflict could turn into a proxy war involving the United States and Iran.
Iranian strait
Reports emerged this weekend that there was a link between the attacks by Hamas and Iran. Any retaliation against Tehran could jeopardize the passage of ships through the Strait of Hormuz. That is a crucial passage, which Iran has previously threatened to close.
The attacks come after months of reduced tensions between Washington and Tehran, with Iran’s crude oil exports rising to their highest level in five years, with America’s quiet approval. In an extreme scenario, Iran could retaliate and attack the Strait of Hormuz if the Islamic republic feels cornered. The waterway is essential for the movement of nearly 17 million barrels of crude oil and condensate per day.
Optimism turned
Optimism arose last week after Russia announced an end to its ban on diesel exports. As a result, the maximum price at the pump had fallen by almost 10 cents.
The war between Israel and Hamas is lowering expectations that Saudi Arabia will reduce or lift its 1 million barrel per day restrictions.
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