On Friday, October 20, international crude oil prices experienced a significant upswing, with Brent crude hitting $93 per barrel.
At 5:46 AM (GMT +1), Brent crude was recorded at $93.31 per barrel, West Texas Intermediate (WTI) at $90.50 per barrel, and Bonny Light at $93.57 per barrel.
The recent spike in Brent crude prices is primarily attributed to the escalating tensions in the Middle East.
Oil traders are closely monitoring the ongoing Israel-Hamas conflict, which has the potential to evolve into a larger regional crisis, with concerns of additional countries becoming entangled.
This apprehension has grown, especially in light of reports indicating Israel’s preparations for a ground assault on Gaza.
Allegations have arisen that Iran had a role in an October 7 attack by Hamas, resulting in casualties among soft targets, including women and children.
Israel’s subsequent retaliatory actions have led to further loss of life and property damage in Gaza.
Oil analysts express concerns that this conflict may not remain confined to the immediate region and could potentially draw in other states, including the United States.
The U.S. has increased its military presence in the Middle East, a region that supplies approximately one-third of the world’s crude oil, making it a crucial factor in global oil price fluctuations.
The evolving situation in the Middle East carries significant implications for the energy sector and underscores the intricate relationship between geopolitical tensions and global oil markets.
The outlook depends on the conflict’s extent. If it remains localized to an Israeli ground assault on the Gaza Strip, oil prices are likely to stabilize around the current level of $93 per barrel, or even decrease.
However, should the conflict expand into a broader regional crisis, it could involve confrontations on Israel’s northern border, possibly drawing in Iranian-backed Hezbollah forces in Lebanon.
The conflict could then extend to include Iran, highlighting the ongoing uncertainty and the potential impact on oil prices, as the scope and actors involved remain dynamic factors to watch closely.