There are four reasons why oil prices are not trading that much higher than they did before the Hamas attack on Israel nearly three weeks ago, according to Capital Economics.
As of Thursday, U.S. benchmark December West Texas Intermediate crude CLZ23, -2.39% CL.1, -2.39% traded at $83.88 a barrel on the New York Mercantile Exchange. That’s about 1.3% higher than the Oct. 6 settlement of $82.79, the day before the Oct. 7 Hamas attack which started a war between Israel and Gaza.
That includes Iran, which accounts for 24% of oil reserves in the Middle East and 12% in the world, at the end of 2021, according to the U.S. Energy Information Administration. Iran has been known to aid the militant group Hamas.Still, oil producers in the Gulf are now “much more integrated into global financial markets” than in the past and would not want to risk sanctions, said Bain.
Third, most countries now have “sizeable strategic reserves to drawdown in the event of supply disruption,” she said. The Biden administration ordered the largest-ever release of oil from the U.S. Strategic Petroleum Reserve last year, in the wake of the Russia-Ukraine war.