The recent attack by Hamas against Israel has shaken the oil market and altered the geopolitical landscape of the Middle East, the main oil exporting region.
Breakdown of geopolitical stability
The Hamas terrorist attack came at a delicate time, when Middle Eastern countries, including major producer the United Arab Emirates (UAE), began a normalization process with Israel. At the same time, there were rumors of a rapprochement between Saudi Arabia and Israel under the auspices of the US administration.
Hopes for an agreement that would lead to an increase in oil production by Saudi Arabia were dashed after the attack. These events have intensified geopolitical risks, once again focusing attention on the Middle East and its influence on the oil market.
Following the attack, Israel took military action against Hamas, raising tensions in the historically volatile region.
International reactions and possible consequences
Ian Bremmer, president of Eurasia Group, compared the severity of the attack to events of historic magnitude. He highlighted the possibility of expanded conflict in the region and the potential failure of previously discussed agreements between Israel and Saudi Arabia.
Given the events, Saudi Arabia called for calm and reiterated its warnings about the complex situation in Gaza. In turn, many eyes are now on Iran, considering its position in the regional geopolitical context.
Zvi Eckstein, former deputy governor of the Bank of Israel, said that the global impact would be limited unless Iran and Hezbollah intervene directly. However, Iran’s oil supply, recently rising, could shrink again in the face of these events.
Implications in the energy market
ING’s Warren Patterson highlighted that the current US stance towards Iran could harden if the latter’s link to the attacks is confirmed. A tightening of sanctions could result in a significant decrease in oil supply, affecting projections for 2024.
Pierre Andurand, a well-known fund manager, warned about the possible repercussions on oil supply and prices. He suggested the market may need to increase Saudi supply and highlighted tensions that could arise if the US sanctions Iranian oil exports more heavily.
With growing uncertainty, the possibility of a direct conflict with Iran remains a latent concern on the international stage.
