Oil prices jump up to 5% amid Israel-Hamas war
The price of Brent crude, the international benchmark, on Monday surged as high as $88.76 per barrel, rising around $4.18, or 4.94%, while US West Texas Intermediate crude rose to $87.02 a barrel, up $4.23, or 5.11%. The prices surged on concerns that the situation in war-torn Israel and Gaza could disrupt output from the Middle East. The Middle East region supplies nearly one-third of the world's oil. The ongoing conflict has heightened geopolitical tensions in this critical area.
Impact of geopolitical tensions on oil market
At the time of writing, Brent crude traded at $87.34/barrel, up 3.26% from the last trading session's closing price. Historically, geopolitical tensions in the Middle East have greatly influenced oil prices due to the region's vital role in global oil production. The latest attack by Palestinian militant group Hamas on Israel has reignited fears of possible supply disruptions and increased market volatility. As tensions rise, other countries might get involved, worsening the situation and pushing oil prices even higher.
Implications for global economy
The increase in oil prices due to geopolitical tensions and Iran's growing production could have widespread effects on the global economy. Higher oil prices can lead to increased inflation, impacting consumer spending and economic growth. Moreover, countries heavily reliant on oil imports may face greater financial strain as they deal with rising energy costs. As the situation evolves, governments and businesses worldwide will need to keep a close eye on events and brace for potential economic fallout.
Iran's rising oil production
Meanwhile, the United States has been concerned about Iran's rising oil production, as it goes against imposed sanctions on the country. While the US has seemingly ignored this issue so far, experts suggest that it might become harder for them to turn a blind eye in the future. If Iran keeps boosting its production, it could potentially flood the market with excess supply, causing price fluctuations and greater instability in the global oil market.
