The assassination of Hamas leader Ismail Haniyeh pushed up oil prices on Wednesday as market concerns mounted that Israel’s war against the fear group within the Gaza Strip could spread to the broader region.
Middle East experts fear the attack, carried out on Iranian soil when Haniyeh was a guest of the regime, would go away Tehran’s ageing leader Ali Khamenei little selection but to retaliate. It got here hours after an Israeli attack on a Hezbollah Commanderone other Iranian-backed terrorist group behind the recent bombing of Druze children within the Golan Heights.
The global benchmark price for Brent crude oil recovered as Khamenei accused Israel of “severe punishment“, after violating their boundaries: “It is our duty to take revenge.”
Futures prices for the Front month contract on London’s ICE exchange, prices rose nearly 3% to $80.81 a barrel, shaking off recent bearish sentiment as a consequence of weak demand from China, the world’s second-largest economy. The next catalyst is predicted later within the day, when the Energy Information Administration releases its weekly inventory report on U.S. crude oil reserves.
After this bitter and tragic event throughout the borders of the Islamic Republic, it’s our duty to take revenge.
— Khamenei.ir (@khamenei_ir) July 31, 2024
The Strait of Hormuz, which spans Iran on one side and Oman on the opposite, is the “Most essential oil bottleneck on the earth“, which connects the Persian Gulf with an important maritime shipping routes, in response to the EIA.
Strait of Hormuz
About a fifth of world demand passes through the strait every single day and analysts at ING warned that risks posed by the region could easily disrupt economic activity world wide through logistics delays and rising insurance premiums for sea freight.
“If there are disruptions in the Strait of Hormuz, the impact on oil and global trade could be huge,” ING said. If rising oil prices result in a renewed rise in gasoline prices, inflationary pressures could delay rate of interest cuts by the US Federal Reserve and possibly change into an election issue in November.
Much of the oil transported through the strait is produced by Aramco, the $1.8 trillion publicly traded energy giant controlled by Saudi Arabia. Iran is Saudi Arabia’s important adversary within the region, and the 2 countries only recently resumed diplomatic relations.
The kingdom might be drawn into the conflict – a serious risk because it is the one OPEC+ country that may easily respond to provide shocks.
Some thoughts on the assassination of Haniyeh.
There isn’t any confirmation yet whether it was Israel that killed Haniyeh and whether it was through an airstrike. But if that’s the case, the assassination offers Netanyahu several benefits beyond the plain goal of eliminating Haniyeh in response to October 7:
1. It… pic.twitter.com/aIVzRTFRbq
— Trita Parsi (@tparsi) July 31, 2024
“Two attacks, one in Beirut and one in Tehran, destroy the chances of a ceasefire in Gaza and instead push the Middle East closer to a catastrophic regional war,” wrote Vali Nasr, a former State Department official and former dean of the Johns Hopkins SAIS School, “all in the vacuum of a lame duck in the United States.”
Oil production capped by OPEC+ cartel
Currently, Saudi Arabia limits production to simply 9 million barrels per day, a level that was set as a part of a cartel-wide agreement was reached last month. However, in an emergency, the country can quickly pump out 12 million barrels of its light, sweet crude, which is valued for its low impurity content.
The next OPEC+ meeting won’t happen until early December.
It is unclear whether the Gaza war will still be raging at this point, greater than a 12 months after the October 7 attack, following the assassination of the political leader of Hamas. Before OPEC+’s next planned decision on production levels, the United States will even elect its next president, and the conflict with Israel has change into a contentious issue between the 2 parties.
Meanwhile, experts consider that Israel’s unpopular Prime Minister Benjamin Netanyahu is actively blocking a ceasefire with the fear group that will include the discharge of the remaining hostages in an effort to stay in power.
Trita Parsi, vice chair of the foreign policy think tank Quincy Institute, said the killing of Haniya in Iran would undo progress in de-escalating tensions and potentially drag the United States and its allies resembling Saudi Arabia right into a larger conflict.
“It could give Netanyahu the war he wants,” he wrote.
