Oil prices went above $90 a barrel again on Thursday following an increase in response to the Gaza hospital strike and Iran’s call for an oil embargo of Israel.
The price of Brent crude oil, considered the global benchmark for oil prices, rose from around $89.25 a barrel on Tuesday to well above $91 that evening. The price broke $92 a barrel on Wednesday. On Thursday, it fell back below $90 before rising above $93 a barrel as of 4:00 p.m. ET.
A blast occurred at the al-Ahli hospital in Gaza City on Tuesday. Hamas authorities blamed an Israeli airstrike, but the Israel Defense Forces said they were not responsible and that a failed rocket launch from Islamic Jihad caused the blast — a position shared by the US government. The hospital strike nonetheless caused widespread outrage against Israel in the Middle East.
On Wednesday, Iranian Foreign Minister Hossein Amir-Abdollahian called on members of the Organization of Islamic Cooperation to place an oil embargo on Israel. The diplomat made the statement during a meeting of the organization in Saudi Arabia.
The price of Brent crude oil was below $85 a barrel on Oct. 6, the day before Hamas’ made its incursion into southern Israel that kicked off the war.
Why it matters: The continued war could produce some changes in global oil prices. Reporter Ines Ferre told Yahoo! Finance on Wednesday that Iran’s call for an oil embargo “sent oil prices higher.”
On the other hand, Reuters reported on Wednesday that the Organization of the Petroleum Exporting Countries (OPEC) is not planning any immediate action following the Iranian foreign minister’s call for an oil boycott of Israel.
Iran and several Arab states are members of OPEC, and Saudi Arabia is the cartel’s largest producer.
Oil prices rose approximately $2 to above $86 a barrel after Hamas’ original attack on Oct. 7. Researcher Alex Kimani wrote for OilPrice.com on Wednesday that the price effects of the war have been “modest” so far. However, some observers have “underpriced the risk” of the war expanding to include Hezbollah in Lebanon, according to him.
“Some commodity experts are now saying the oil markets have underpriced this risk, and oil prices could skyrocket if the situation above unfolds,” wrote Kimani on the prospect of Hezbollah’s involvement.
Israel and Hezbollah have struck one another several times on the border since the start of the war, but the Iran-backed group is not a full participant in the conflict at present.
Know more: Israel is maintaining its domestic gas supply as well as exports amid the war with Hamas, despite Chevron shutting down a key Israeli gas field in response to the conflict, Jack Dutton reported for Al-Monitor on Wednesday from the Energy Intelligence Forum in London.
Source : Al Monitor