Oil prices jump with more than 4% on Monday as the Israel-Hamas conflict extended into its third day following a surprise attack on Israel by Palestinian militants Hamas.
Global benchmark Brent settled 4.2% higher at $88.15 a barrel, while the U.S. West Texas Intermediate gained 4.3% to $86.38 per barrel.
At dawn on Saturday during a major Jewish holiday, Palestinian militant group Hamas launched a multi-pronged infiltration into Israel — by land, sea and air using paragliders. The attack came hours after thousands of rockets were sent from Gaza into Israel.
At the time of publication, at least 700 Israelis have reportedly been killed, according to NBC News. The Palestinian Health Ministry, meanwhile, has recorded 313 deaths so far.
While there is a surge in crude prices, analysts believe it will be a knee-jerk reaction, and likely temporary.
“For this conflict to have a lasting and meaningful impact on oil markets, there must be a sustained reduction in oil supply or transport,” said Vivek Dhar, Commonwealth Bank’s director of mining and energy commodities research.
“Otherwise, and as history has shown, the positive oil price reaction tends to be temporary and easily trumped by other market forces,” he wrote in a daily note. The conflict does not directly put any major source of oil supplies in danger, he added.
Neither side is a major oil player. Israel boasts two oil refineries with a combined capacity of almost 300,000 barrels per day. According to the U.S. Energy Information Administration, the country boasts “virtually no crude oil and condensate production.” By a similar strand, the Palestinian territories produce no oil, data from EIA shows.
However, the conflict sits at the doorstep of a key oil producing and export region for global consumers.
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