<h1>Oil Prices Soar After Hamas Attack, Should You Invest in McDonald’s and Caterpillar?</h1>
<p>In a shocking development, oil prices surged over 4% today (Oct. 9) following an attack by terrorist group Hamas on Israel. The attack, which occurred two days prior, involved infiltrating the country by land, sea, and air. This ongoing conflict has already resulted in the loss of 1,100 lives on both sides. Now, the question is: should investors consider buying stocks in McDonald’s and Caterpillar amidst this turmoil?</p>
<p>Despite the violence, the world’s oil supply has not been immediately impacted. According to the US Energy Information Agency (EIA), Israel has minimal crude oil and condensate production, with an annual capacity of only 300,000 barrels per day, in stark contrast to the US’s 18.1 million capacity. Additionally, the Palestinian territories have negligible oil production.</p>
<p>However, tensions between Israel and Palestine are expected to escalate further, with Israeli Prime Minister Benjamin Netanyahu promising “mighty vengeance” and launching airstrikes on Gaza. This intensifying situation puts strain not only on the region but also on the global oil supply, as the Middle East contributes a third of the world’s oil. Moreover, reports suggest that the Palestinian militants are supported by Iran, the seventh-largest oil producer globally. If western countries officially link Iran’s intelligence to the Hamas attack, there could be imminent downside risks for Iran’s oil supply and exports, warns Vivek Dhar, Commonwealth Bank’s director of mining and energy commodities research, in an interview with CNBC on October 8.</p>
<h2>Charted: Israel-Hamas Conflict Boosts Oil Prices</h2>
<blockquote><p>”Global oil inventories are low, and the Saudi and Russian production cuts will lead to more inventory draws over the next few months. The market will eventually have to beg for more Saudi supply, which I believe will not happen until Brent crude reaches $110.”</p>
<footer>—Pierre Andurand, Hedge-fund manager and energy trader</footer></blockquote>
<h2>Country in Focus: Iran</h2>
<p>Although Tehran denies direct involvement, Iranian leaders have endorsed the Hamas attack on Israel, characterizing it as an act of “self-defense”. The surprise attack, which coincided with the 50-year anniversary of the 1973 Yom Kippur War, raises concerns about the possibility of history repeating itself. During the 1973 war, the Organization of Petroleum Exporting Countries (OPEC) imposed an oil embargo on Israel’s allies. However, given that Arab nations are not actively participating in the conflict this time, another Arab oil embargo is unlikely.</p>
<p>Nevertheless, oil prices are expected to face challenges in maintaining stability throughout this prolonged crisis. Here are three potential supply issues to monitor closely: </p>
<ul>
<li>🇸🇦 Iran has previously shown its ability to disrupt Saudi oil production, as it did with drone strikes carried out by Yemeni proxies in 2019.</li>
<li>🇺🇸 The US could tighten its supervision of trade in sanctioned oil and take a stronger stance against Iranian oil smuggling, which might compel Iran to reduce its output.</li>
<li>🇮🇷 If sanctions are more strictly enforced, Iran may revive an old threat from 2011: blocking the Strait of Hormuz. This narrow yet significant shipping route handles almost a third of the world’s waterborne oil, according to Bloomberg.</li>
</ul>
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