Oil held the biggest jump in six months as markets digested the fallout from Hamas’s surprise attack on Israel over the weekend and the prospect of new stimulus in China.
(Bloomberg) — Oil held the biggest jump in six months as markets digested the fallout from Hamas’s surprise attack on Israel over the weekend and the prospect of new stimulus in China.
West Texas Intermediate was little changed near $86 a barrel. At least 1,500 people have died so far as the conflict in Israel, which has the potential for far wider geopolitical ramifications, entered a fourth day.
Meanwhile, China is considering new measures to help its economy meet the country’s official growth target. An announcement could come this month, people familiar with the matter said.
While Israel and the Gaza Strip play a minor role in the world of oil, the Middle East accounts for about a third of global supply, and the market is still worried about potential threats. Stricter enforcement of US sanctions on Iranian crude exports and any blockades or attacks on vessels in key shipping lanes are the main risks, while the conflict also transforms the landscape for any potential US, Saudi, Israeli security pact.
President Joe Biden said at least 11 American citizens had died, with others likely held hostage by Hamas. He plans to speak about the attacks later Tuesday. Iran denied on Monday that it was involved in the assault.
“Without any significant impact on oil production/exports, we expect the impact on oil prices to be limited after the Hamas attack on Israel,” said Helge Andre Martinsen, a senior oil analyst at DNB Bank ASA. “However, we acknowledge a certain short-term geopolitical risk premium is warranted.”
The conflict has ratcheted up the volatility of oil prices, which have gyrated over the past month as concerns over high interest rates and slowing growth halted a rally that had been underpinned by Saudi Arabian-led output cuts. On Monday, options markets saw their biggest swing in favor of bullish calls since March 2022, when Russia’s invasion of Ukraine was roiling markets.
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–With assistance from Serene Cheong.
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