Oil Prices Fall as Israel-Hamas Conflict Fails to Disrupt Supply

By Adedapo Adesanya

Oil prices settled lower on Tuesday as no direct oil supplies are impacted by the conflict between Israel and the Palestinian Islamist group, Hamas.

Brent crude lost 50 cents or 0.57 per cent to trade at $87.65 a barrel while the US West Texas Intermediate (WTI) crude slid 41 cents to finish at $85.97 a barrel.

Brent and WTI had surged more than 4 per cent on Monday as the military clashes raised fears that the conflict could spread beyond Gaza but bounced off session lows as concerns eased about potential supply disruptions from the battle.

However, traders remained watchful amid the possibility of other oil-producing players coming into the war.

While Israel produces very little crude oil, markets are worried that if the conflict escalates, it could hurt Middle East supply and worsen an expected deficit for the rest of the year.

US officials have pointed fingers at Iran as being involved in the Hamas attack on Israel, but credible evidence of the Islamic Republic’s role has yet to appear.

If this happens, it could see the involvement of other oil producers entering into the conflict for reasons bordering on foreign policy and regional interests.

Market analysts warn that if there is evidence of the Iranian government’s involvement in the conflict, it would push prices higher with Brent oil likely to stabilise between $90 and $100 per barrel in the fourth quarter of 2023.

In a more positive sign for supply, Venezuela and the US have progressed in talks that could provide sanctions relief to the South American country by allowing at least one additional foreign oil firm to take Venezuelan crude oil under some conditions.

The US has been trying to encourage negotiations between President Nicolas Maduro and the political opposition over elections in Venezuela and other demands. Sanctions were imposed following Mr Maduro’s 2018 reelection, which was met with opposition from foreign countries.

Meanwhile, the market will continue to check if there will be tweets to plans by Saudi Arabia to maintain a voluntary cut of 1 million barrels per day until the end of 2023, while Russia is also keeping a 300,000 barrels per day voluntary export curb until the end of December.