SINGAPORE (ICIS)–Oil prices continued to surge on Monday, rising by nearly $5/bbl, as investors weighed the possibility of a protracted conflict in the Middle East following confrontations between Israeli military forces and Palestinian Islamist faction Hamas over the weekend.

($/bbl)	Contract	Low	High	Open	Last (at 04:18 GMT 9 October)	Previous Settlement	Change	High Change
Brent	Dec	86	89	86.45	87.69	84.58	3.11	4.42
WTI	Nov	84.67	87.24	85.25	86.03	82.79	3.24	4.45

There are concerns that the Israel-Palestine conflict could disrupt supply from the Middle East when availability is already tightening due to prolonged production cuts by Saudi Arabia and another oil major Russia.

The Middle East is a major global oil production and export hub led by Saudi Arabia, the de facto leader of oil cartel OPEC. Five of the 13 OPEC members – Iran, Iraq, Kuwait, Saudi Arabia and the UAE – are in the region, which accounts for almost third of global supply.

Prior to Hamas’ attacks on Israel over the weekend, crude prices logged their biggest weekly loss since March, largely on demand concerns amid the global economic slowdown, with oil major Russia lifting its ban on diesel exports weeks after imposing the measure.

Interactive timeline of recent clashes between Palestinian militants and Israel over the last decade.

“For this conflict to have a lasting and meaningful impact on oil markets, there must be a sustained reduction in oil supply or transport,” the Commonwealth Bank of Australia said in a note.

“Otherwise, and as history has shown, the positive oil price reaction tends to be temporary and easily trumped by other market forces,” it said.

On 7 October, Hamas initiated the most significant military offensive against Israel witnessed in decades, causing hundreds of Israeli fatalities and provoking a series of retaliatory aerial assaults by Israel on the Palestinian enclave of Gaza.

“We are at war,” Israeli Prime Minister Benjamin Netanyahu said in a televised address on the day of the attack, declaring a mass army mobilization. Israel declared a state of war on 8 October.

Click here for an interactive timeline of recent clashes between Palestinian militants and Israel over the last decade.

The conflict has involved an extensive military engagement, including airstrikes and ground battles, leading to a high number of casualties and injuries.

Israel has reported that more than 700 of its citizens have died in the attacks so far, while Palestinian health officials said that more than 400 people have been killed in Gaza, with more than 4,000 injured on both sides.

Iranian President Ebrahim Raisi has called on Muslim governments globally to stand with the Islamic community, Iranian state news agency Islamist Republic News Agency (IRNA) reported on 8 October.

“Given the tightness already facing physical oil markets in Q4 2023, an immediate reduction in Iran’s oil exports risks pushing Brent futures above $100/bbl in the short term,” the bank added.

Iran’s follow-up response to enforced western sanctions and US military presence in the Middle East following Hamas attacks on Israel will be the next scenario likely assessed by the market, according to Commonwealth Bank of Australia.

The US is moving its aircraft carrier, the USS Gerald R Ford, closer to Israel as President Joe Biden pledged Washington’s “rock solid’ support” to Israel.

“Iran’s ability to disrupt global oil markets is significant given the country’s control over the Strait of Hormuz. The waterway sees the transport of 15-20% of global oil supply,” the Commonwealth Bank of Australia stated.

“Any hint that Iran is looking to blockade the Strait of Hormuz would immediately send oil prices surging,” it added.

Focus article by Nurluqman Suratman

Thumbnail image: Israel launches operation “Iron Swords” after Hamas’ attack, Sderot – 08 October 2023. (By ATEF SAFADI/EPA-EFE/Shutterstock)

Circular plastics in Asia and how it is shaping the plastic recycling industry

An overview of circular plastics in Asia and how this transformative concept is fundamentally shaping the plastic recycling industry.

Navigating the new gas market

Fuel costs have stabilised at lower levels, but the gas market remains a difficult place to navigate following Russia’s invasion of Ukraine in 2022.

Asia’s energy pivot: mitigating LNG uncertainties

Asia has ramped up its efforts to diversify its energy mix following Europe’s increased appetite for LNG since 2022.

Americas Chemicals: What will 2024 bring?

Americas Chemicals: What will 2024 bring?