Get ready for a knee jerk reaction in energy markets, as oil experts predict

Crude oil prices could experience a surge on Monday, but energy experts believe that the impact of the attack by Palestinian militants Hamas on Israel will be limited, as long as the conflict doesn’t escalate further, according to CNBC.

Vandana Hari, CEO of Vanda Insights, described that there may be a temporary increase in crude prices when the markets open on Monday. She stated, “There will be some risk premium factored in as a default until the market is satisfied that the event is not setting off a chain reaction and that oil and gas supplies in the Middle East will not be affected.”

Militants from Hamas, which is designated as a terrorist organization by the U.S., European Union, and the U.K., infiltrated Israel through various means during a major Jewish holiday. Prior to this incursion, Islamist militants launched thousands of rockets into Israel from Gaza.

The Israeli Prime Minister, Benjamin Netanyahu, has declared the offensive phase, vowing to achieve the objectives and impose a high cost on the enemy. Late on Saturday, Israel cut off the supply of electricity, fuel, and goods to the Gaza Strip, where 2.3 million Palestinians reside.

As of the time of publication, at least 250 Israelis have been killed and over 1,860 injured, while the Palestinian Healthy Ministry reported 256 deaths and 1,790 injuries in Gaza.

Although Israel and Palestine are not major players in the oil industry, analysts have cautioned that the conflict’s proximity to an important oil-producing and exporting region could further escalate tensions. Israel has two oil refineries with a total capacity of nearly 300,000 barrels per day, while Palestine does not produce any oil, according to the U.S. Energy Information Administration (EIA).

Energy experts have expressed that the impact on oil prices will be limited unless the conflict between Israel and Palestine quickly escalates into a regional war involving other global powers. The ongoing Israeli-Palestinian conflict has the potential to spark wider regional hostilities.

Pierre Andurand, a French businessman and hedge fund manager, has stated that while the Levant region is not a significant oil producer, the war could eventually have an impact on oil supply and prices. He pointed out that global oil inventories are low, and with production cuts by Saudi Arabia and Russia, more inventory decreases are expected in the coming months.

Hari, however, warned about the possibility of the Israeli-Palestinian conflict expanding into larger regional hostilities. She highlighted that on Sunday, Lebanon’s Hezbollah militant group confirmed launching attacks on three sites in the Shebaa Farms, which is a border area between Lebanon, Syria, and the Israeli-occupied Golan Heights. In response, the Israeli Defense Force struck Hezbollah’s infrastructure.