Oil markets are “on edge” over Israel’s war on terror group Hamas, which could have broader repercussions for the global economy, according to the latest market report from the International Energy Agency (IEA)..While there has been no direct impact on physical supply, “markets will remain on tenterhooks as the crisis unfolds,” it said..“The Middle East conflict is fraught with uncertainty and events are fast developing. Against a backdrop of tightly balanced oil markets anticipated by the IEA for some time, the international community will remain laser focused on risks to the region’s oil flows.”.After spiking as much as US$4 per barrel after Hamas’ unprovoked attacks on Israeli civilians, oil prices have since stabilized in the $85 range; on Thursday Scottish North Sea Brent was down about two cents to $85.80. North American West Texas Intermediate was off 50 cents to $82.99..Although Israel isn’t a major oil producer, about a third of the world’s seaborne crude cargos pass through the Persian Gulf and the strategic Strait of Hormuz..Analysts said future price moves would be predicated on the actions of third parties such as Iran..On Thursday, US President Joe Biden was facing pressure to clamp down on Iranian exports even as the risk of triggering damaging price spikes at the gas pump. He is also facing calls to refreeze $6 billion in Iranian assets that were released in part to restart nuclear talks..Iranian oil exports have risen by almost 600,000 barrels per day since the start of the year while Biden has offered sweeteners for it to resume negotiations on its nuclear program. That isn’t sitting well with Republican lawmakers who are indirectly blaming Biden for stoking the latest conflagration..“I am urging the Biden administration and the Israelis to jointly come up with a plan to destroy Iran’s oil infrastructure,” Sen. Lindsay Graham told a South Carolina television station. “Without oil, they have no money. Without money, terrorism loses its biggest benefactor.”.A direct conflict between Israel and Iran could easily lead to a $5 to $10 bump in oil prices, said Rapidan Energy Group boss Bob McNally..Others have suggested $100 remains a distinct possibility even without an escalation of the war..The IEA said it would continue to monitor the oil market closely and stands ready to act if necessary to ensure markets remain adequately supplied..In the event of an abrupt supply shock, a potential IEA response includes a requirement for member countries to release emergency stocks and/or implementing demand restraint measures..Although Canada is an IEA member, it isn’t required to maintain oil stockpiles for the simple reason it already has the world’s third-largest reserves.
