While it’s by no means the most important and consequential aspect of what is going on in Israel this week, wars in the Middle East have a tendency to disrupt oil supply around the world, including in the United States.
Members of Hamas attacked various locations in Israel on Saturday, leading Israel to formally declare war, something that Israel, throughout various conflicts throughout its history, has not always done. Over 1,300 have died, including 800 Israelis and 500 Palestinians though the number continues to rise, according to Israeli Army figures, with many others abducted; Hamas claims to hold more than 100 hostages.
By the Barrel
Will these shocking events have an effect will this have on energy supplies? Not yet, it appears.
According to GasBuddy, the average gas price in the U.S. actually dropped 10 cents last week to $3.67 per gallon, the price dropped in all 50 states.
While GasBuddy’s Patrick De Haan noted that “the locomotive of falling prices has only recently started on a downhill, gaining momentum,” he also pointed to “new caution signs” following the attacks in Israel.
“I’m hopeful the violence won’t spread, limiting the impact of these falling gas prices. Even with oil prices rising as a reaction to the attacks, I remain optimistic the national average could decline another 25-45 cents by late November, with prices potentially falling nearly triple that in California,” De Haan said in the site’s weekly blog post.
CNBC, later on Monday, reported that global oil prices had increased by more than 4 percent.
“For this conflict to have a lasting and meaningful impact on oil markets, there must be a sustained reduction in oil supply or transport,” Vivek Dhar, Commonwealth Bank’s director of mining and energy commodities research, told CNN. “Otherwise, and as history has shown, the positive oil price reaction tends to be temporary and easily trumped by other market forces,” he added.
Israel, as casual observers of the Middle East may not be aware, is not an oil-producing nation, nor are the Palestinian territories. Therefore a war between them would not in any way directly disrupt oil production. But if other, surrounding nations were to get involved in the conflict, that’s a whole other question, as was the case in 1973 and 1974 when an OPEC oil embargo followed the Yom Kippur War. The embargo, meant to punish countries that had supported Israel during that 1973 war, caused oil prices to spike in the U.S. and elsewhere.
Going forward with the current conflict, the biggest question is likely about what role Iran played in the attacks against Israel, and whether that nation will be drawn into the war.
“All eyes will be on the Middle East in the coming days to see what might develop, and while oil production is not yet impacted, Iran’s involvement in the attacks, and being a major oil producer, could bring attacks from Israel in the days ahead,” De Haan said in the post, adding that a war could also scuttle reported normalization talks between Israel and Saudi Arabia, with the latter country possibility agreeing to increase oil production.
“If Western countries officially link Iranian intelligence to the Hamas attack, then Iran’s oil supply and exports face imminent downside risks,” Commonwealth Bank’s Dhar told CNBC in the Monday report.
The Wall Street Journal reported over the weekend that Iran’s Islamic Revolutionary Guard Corps had played an active role in the planning of the attacks, including in meetings in Beirut attended by top officials. However, there’s been some pushback on that reporting, including by the Israeli government, and Prime Minister Benjamin Netanyahu did not accuse Iran of that when he addressed the nation Monday.
Sen. Lindsey Graham (R-SC), in a Fox News appearance this week, stated that for every American or Israeli hostage executed, “we should take out an Iranian oil refinery,” Doing so would, almost certainly, have a dramatic and negative effect on oil supply.
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Stephen Silver is a Senior Editor for 19FortyFive. He is an award-winning journalist, essayist and film critic, who is also a contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Stephen has authored thousands of articles over the years that focus on politics, technology, and the economy for over a decade. Follow him on X (formerly Twitter) at @StephenSilver, and subscribe to his Substack newsletter.