Energy
Monday, October 9th, 2023 10:57 pm EDT
Key Points
- Oil prices jumped over 3% due to a surprise attack by Hamas on Israel, but the impact on oil and gas prices is expected to be limited, as neither Gaza nor Israel are significant petroleum producers. Experts believe a broader regional conflict involving major global players like the U.S. and Iran would be necessary to significantly affect oil prices.
- Gas prices in the U.S. have been trending lower despite the conflict. American drivers have not seen a substantial increase in gasoline prices, with the average price for a gallon of regular gasoline dropping 11 cents from the previous week, according to AAA. Downward pressures on oil prices, such as economic factors and potential interest rate hikes by the Federal Reserve, are expected to continue.
- The current hostilities in Gaza and Israel are considered geographically and practically distinct from Russia’s ongoing invasion of Ukraine, which has a more significant impact on global energy markets due to Russia’s role as a major oil and natural gas exporter. Iran is seen as a wildcard in the situation, as it has congratulated Hamas on its offensive against Israel but denied direct involvement. Heating oil prices are expected to rise due to seasonal changes, particularly in the Northeastern United States, where heating oil demand increases as temperatures drop.
The recent surprise attack launched by the militant group Hamas on Israel from the Gaza Strip caused oil prices to surge by more than 3%. However, experts suggest that the impact on oil and gas prices, particularly in the United States, is likely to remain limited unless the conflict escalates further and involves third parties from inside or outside the region.
Industry experts, including Iman Nasseri, Middle East managing director of energy consultancy Facts Global Energy, have indicated that the effect on oil prices will likely be constrained unless the conflict rapidly expands into a regional war involving major global players like the United States and Iran, along with other supporters of the involved parties.
As long as the violence does not spread beyond the immediate conflict between Hamas and Israel, it is expected that oil and gas prices in the United States will not be significantly affected. This sentiment is supported by the fact that neither Gaza nor Israel are significant petroleum producers.
In the United States, gas prices have been following a downward trend. Despite the conflict, American drivers have not witnessed any substantial increase in gasoline prices. The average price for a gallon of regular gasoline in the U.S. actually decreased by 11 cents from the previous week, according to AAA. Several factors, such as the jobs report and the potential for further interest rate hikes by the Federal Reserve, continue to exert downward pressure on oil prices, as explained by Patrick DeHaan, head of petroleum analysis at GasBuddy.
Furthermore, experts note that the ongoing hostilities in Gaza and Israel are geographically and practically distinct from Russia’s ongoing invasion of Ukraine, which began last year. Unlike Gaza and Israel, Russia is a major exporter of oil and natural gas. However, there is a wildcard in the form of Iran, which has congratulated Hamas on its offensive against Israel but denied direct involvement.
Additionally, heating oil prices are anticipated to rise, primarily due to seasonality changes. Demand for heating oil tends to increase as temperatures drop, particularly in areas like the Northeastern United States, leading to a surge in consumption during the heating season.
For U.S. drivers planning major road trips in the coming months, the current situation is not a significant cause for concern in terms of fuel prices. However, it is advisable to keep an eye on the evolving situation, especially if geopolitical turmoil escalates and impacts energy markets.
For full original article on CNBC, please click here: https://www.cnbc.com/2023/10/09/as-israel-hamas-conflict-pushes-oil-higher-what-drivers-need-to-know.html
