Oil traded in a narrow range, with Israel yet to launch its expected ground offensive of the Gaza Strip and the US stepping up efforts to prevent the crisis from becoming a regional conflagration.
Brent traded near $91 a barrel, after surging almost 6% on Friday to cap a sizable weekly gain. Over the weekend, US officials rushed to speak with Middle Eastern nations — including back-channel talks with Iran — to contain the conflict. Secretary of State Antony Blinken returns to Israel on Monday.
The global crude market has been transfixed by the confrontation following Hamas’ initial offensive against Israel amid concern that other states, especially Iran, may be drawn in. Any instability or escalation of fighting across the Middle East could jeopardize flows of crude from the region that accounts for about a third of worldwide supply, further tightening the market.
“Historically, Middle East conflicts have rarely translated to a sustained rise in oil prices when they have not disrupted supply,” said Han Zhong Liang, investment strategist at Standard Chartered Plc. In this case, “there is a low risk of both direct and indirect supply disruptions,” Han said.
Blinken will make an unscheduled return to Israel today following talks with Arab officials. Earlier, Iran’s Foreign Minister Hossein Amirabdollahian warned that “no one can guarantee control over the situation and prevent the conflict from spreading” if Israel continues its offensive. Tehran is Hamas’ main backer, and also supports the Hezbollah group in southern Lebanon.
With thousands of Israeli troops massed on the Gaza border, the Biden administration has beefed up the US military presence in the region. The USS Eisenhower carrier strike group has been dispatched to the eastern Mediterranean to join the USS Gerald Ford, sent shortly after Hamas’ attack.
The crisis has boosted trading volumes. In the first half hour on Monday, both Brent and US benchmark West Texas Intermediate each saw more than 10,000 lots changing hands, far above the usual levels.
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