Oil prices have surged past $91 a barrel as diplomatic efforts intensify to address the crisis in the Middle East. The fear of the Israel-Hamas war sparking a wider conflict in the oil-rich region has raised concerns about tightening global oil supply.
In Asian hours, Brent crude futures, the global oil benchmark, soared to $91.2 a barrel, only to slip back slightly to $90.77. Similarly, West Texas Intermediate, the US benchmark, saw a brief spike to $87.98 before settling at a closing price of $87.68.
Experts predict that oil prices may hit $100 a barrel in the short term, presenting further challenges in an already volatile market. The escalating regional risk is a major factor. If the conflict broadens and Iran gets involved, it could potentially disrupt up to 20 million barrels per day of oil, posing a significant risk to oil markets.
Furthermore, there are concerns that the ongoing conflict could reduce global oil supply even further. The probability of Saudi-Israeli normalization decreases, and Iranian oil production also faces risks. These factors, combined with production cuts by Saudi Arabia and Russia, have been driving global oil prices higher since late June.
The impact of the crisis extends beyond the oil market. In currency markets, the Israeli shekel has weakened by 0.3% against the US dollar, following a sharp fall following the Hamas attacks. This further highlights the economic ramifications and global ripple effects of the conflict in the Middle East.
As tensions continue to escalate in the region, the international community is closely monitoring the situation. Efforts to find a peaceful resolution are crucial not just for regional stability but also to mitigate the impact on global oil markets and currencies. The stakes are high, and the world is anxiously watching the development of events in the Middle East.