How does the Israeli-Palestinian conflict affect world oil

The escalation of the Israeli-Palestinian conflict since October 7 has once again triggered volatility in global risk assets. Many times in history, wars in the Middle East have been the trigger for global energy crises. The Israeli-Palestinian conflict began in the early 20th century when the Palestinian territories were still a British colony. As Jewish immigration increased, the Palestinian people rebelled against British rule and the Jewish invasion. In 1948, Israel declared its independence, triggering the Israeli-Palestinian war. Since then, the Israeli-Palestinian conflict has escalated without resolution, leaving thousands dead and tens of thousands displaced. In the early morning of October 7, Israeli Jewish settlements near the Gaza Strip were attacked by Hamas militants on an unprecedented scale, and a new round of war between Israel and Hamas broke out. So far, tens of thousands of people have been killed or injured!

In recent years, the Israeli-Palestinian conflict has been one of the global focal points. This conflict affects not only the two states of Palestine and Israel, but also the stability and peace of the entire region. With the passage of time, the impact of the conflict is also expanding, the volatility of international oil prices has intensified, and the outlook of the oil market has become more and more uncertain. The impact of the Israeli-Palestinian conflict on oil prices is largely due to the fact that the Middle East is one of the world's largest oil producing and exporting regions. If there is a war or conflict in this region, the oil supply may be affected, resulting in higher oil prices. In addition, oil shipping routes in the Middle East are also very important, and if these routes are damaged or blocked, it will also have an impact on oil prices.

At present, the impact of the Israeli-Palestinian conflict on oil prices is not very large. First of all, there are more than a dozen countries producing and exporting oil in the Middle East, which is dominated by oil producers led by Saudi Arabia. The Palestinians and Israelis are not oil-producing or oil-exporting countries, so even if there is a war, the impact of the conflict will depend on its duration, intensity, and whether it spreads to other parts of the Middle East. As long as the scope of the conflict does not expand further, the probability of geopolitical events affecting the oil market is limited.

In addition, the international oil market is very complex, and prices are affected by a variety of factors, such as the global economic situation, oil demand, and the policies of oil-producing countries. Therefore, even if there is a war or conflict in the Middle East, it will not necessarily have a direct impact on oil prices. It is important to note that the modern oil market has become globalized, and is no longer limited to one region or country as before. Oil production and exports are no longer dependent on the Middle East, and oil producers in other regions are also increasing. With the development of technology, the use of renewable energy is gradually becoming popular, and the status of oil is gradually declining. Therefore, even if there is a war or conflict in the Middle East, the impact on oil prices will gradually diminish. Although the Middle East is one of the main regions for oil production and export, the oil market has become globalized, with an increasing number of oil-producing countries in other regions and the use of renewable energy sources is gradually becoming more widespread.

In the early morning of the 8th Beijing time, the US WTI crude oil futures closed down on Tuesday, and hit the lowest closing price in three and a half months. Concerns about the impact of the situation in the Middle East on crude oil supplies eased, while the non-farm payrolls data raised market expectations of the end of the Fed's rate hike cycle, putting downward pressure on crude oil prices. West Texas Intermediate crude for December delivery fell $3.45, or 4.3%, to settle at $77.37 a barrel on the New York Mercantile Exchange. Based on the most active contract, it was the lowest close for a front-month contract since July 21.