Crude oil storage tanks are seen in an aerial photo at the Cushing Oil Center in Cushing, Oklahoma, U.S., on April 21, 2020. REUTERS/Drone Base/File Photo Get license rights
TOKYO, Oct 16 (Reuters) – Oil traded largely flat on Monday after last week’s rally as investors waited to see if the Israel-Hamas conflict would drag on in other countries – pushing prices higher and facing a fresh blow. World economy.
Brent futures were last at $90.89 a barrel at 0419 GMT. US West Texas Intermediate (WTI) crude was down 2 cents at $87.67 a barrel.
Both benchmarks rose nearly 6% on Friday, posting their biggest daily percentage gains since April, as investors priced in the possibility of a wider Middle East conflict.
For the week, Brent advanced 7.5%, while WTI rose 5.9%.
“Investors are trying to gauge the impact of the conflict, while a large-scale ground offensive did not begin until 24 hours after Israel first notified residents of the northern part of Gaza to flee to the south,” said Hiroyuki Kikugawa. Head of NS Trading, a division of Nissan Securities.
“The impact involving oil-producing countries is factoring into prices to some extent, but if a real landscape occurs and affects oil supplies, prices could exceed $100 a barrel,” he said.
Conflicts in the Middle East have had little impact on global oil and gas supplies, and Israel is not a major producer.
But the war between the Islamist group Hamas and Israel is one of the most important geopolitical risks to oil markets since Russia invaded Ukraine last year, amid concerns about any potential escalation involving Iran.
Market participants are assessing what could be a wider conflict for supplies from countries in the world’s top oil-producing region, including Saudi Arabia, Iran and the United Arab Emirates.
Australia’s Commonwealth Bank analyst Vivek Dar said in a note on Monday that the US would fully enforce sanctions on Iran’s oil exports if Tehran was found to be directly involved in the Hamas attack.
“The United States has blindly reversed sanctions on Iran’s oil exports this year to improve diplomatic relations with Iran,” he said.
“An increase in Iran’s oil exports of 0.5-1 million barrels per day this year – equivalent to 0.5-1% of global oil supply – risks being sidelined if US sanctions are fully implemented.”
Israeli Prime Minister Benjamin Netanyahu vowed to crush Hamas on Sunday as his troops prepared to move into the Gaza Strip in pursuit of Hamas militants who have shocked the world through Israeli border towns.
Iran warned on Saturday that the situation could spiral out of control with “far-reaching consequences” if Israel’s “war crimes and genocide” were not stopped.
US Secretary of State Anthony Blinken will return to Israel on Monday to talk about a “way forward” after days of shuttle diplomacy between the Arab nations, with fears of an escalating conflict.
The U.S. imposed sanctions last week on owners of tankers carrying Russian oil above the G7 price ceiling of $60, in an effort to close loopholes in a mechanism designed to punish Moscow for its aggression in Ukraine.
Russia is one of the world’s top crude exporters, and tougher U.S. scrutiny of its exports could cut supplies.
Reporting by Yuka Obayashi in Tokyo and Emily Chou; Editing by Sonali Paul and Edwina Gibbs
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