Global energy markets are closely watching the fallout.S&P Global Commodity Insights. Since the Israel-Hamas conflict began, there has been around a 5% price spike in the global Brent oil benchmark (prices more than 3/4 of the world’s traded oil), but whether the conflict will impact gas prices is to be determined.
Why It Matters: Gas prices – which saw peak 2023 prices in September – have been on the decline in recent weeks. However, the war between Israel and the Hamas could pose a risk to crude oil prices (which “holds major implications for the economy and consumers through its direct effect on costs as an input into products ranging from gasoline to plastics,” ABC News explains). Southern Israel nor the Gaza Strip have major oil and gas infrastructure, but the wider Gulf region is important for a large portion of global oil output. If the conflict were to widen to the surrounding area, it could reduce worldwide oil supply and spur on price increases.
Further Context: “The market is reacting to fears of a worst-case scenario: That a conflict in Israel magnifies throughout the region and affects global oil trade … How realistic is that fear? There’s a lot of uncertainty. We’re not sure how this will land,” Texas Tech University professor of business economics, Timothy Fitzgerald.
by Emily Hooker, based in Texas