Last week, markets were looking confident as oil prices kept lowering. On Saturday, however, Hamas’ attacks on Israel changed everything.
Oil prices on Monday reversed last week’s trend and started growing again following Hamas’ attack on Israel on Saturday morning. Oil prices have been steadily growing this year, and will probably continue to rally into 2024 as well.
Brent, the global benchmark of crude oil, rose 4% on Monday to $86. The United States benchmark, the West Texas Intermediate, similarly surged in price to $88, again a 4% increase.
In September, crude prices hovered near the $90 per barrel mark, with analysts predicting it would breach $100 by the end of the year. Some particularly pessimistic experts believe oil prices will reach $150 per barrel next year.
Oil prices have been on the rise because of the combined effort to reduce crude production by Saudi Arabia and Russia, two of the world’s largest exporters.
Saudi Arabia and Russia wished to artificially increase global oil prices following the illegal Russian invasion of Ukraine. The United States, on the other hand, tried to lower prices by beefing up domestic production and opening talks with Saudi Arabia.
But US-Saudi talks pass through the Kingdom’s recognition of Israel, a major talking point in negotiations. Furthermore, Saudi Arabia will likely demand American funding for a civil nuclear program in exchange for opening relationships with Tel Aviv.
How Hamas’ attacks could change everything
On Saturday, the terrorist organization Hamas launched a surprise attack on Israeli soil from the Gaza Strip. Hamas forces advanced several kilometers, taking hundreds of prisoners and killing countless civilians.
Western countries immediately supported Israel, while reactions across the Middle East have been mild. Saudi Arabia outright blamed Israel for the attacks.
The Gaza Strip was an open-air prison, formally part of Palestine but de-facto controlled by Hamas. So far, Israel has contained Hamas’ actions through brutal shows of force.
Hamas’ main ally is Iran, a Shia-Muslim nation and Saudi Arabia’s eternal nemesis. The Iranian fleet controls the traffic of oil and gas through the Strait of Hormuz. Any Iranian involvement or conflict against Saudi Arabia would mean a severe disruption of global oil supplies.
Hamas likely launched its attack because of American attempts at Saudi-Israeli normalization. This would have likely meant the complete destruction of Gaza and the relocation of the Palestinian civilians in the strip. Israel has been accused many times of crimes against humanity for its illegal occupation of Palestine.
Everyone involved finds themselves in a difficult position. The United States and the global West might see a disruption of oil trade and a subsequent increase in the cost of living, after two years of rampant inflation. Iran and Saudi Arabia might find themselves in a war nobody really wants. And Israeli and Palestinian civilians are suffering and dying for the decisions of their respective governments.
