Oil price rises after Hamas attack on Israel

Oil prices rose up to $89 a barrel on Monday after Hamas’s attack on Israel raised fears of a wider conflict across the Middle East. Brent crude was up 5.2 per cent in early trading in Asia, before dropping back to be up 2.7 per cent at $86.86 a barrel. The cost of crude had been tumbling because of concerns about global demand (i.e. weak China growth), but that trend is now being reversed. Israel is not a global oil producer, but a) the conflict could complicate a possible rapprochement between Israel and Saudi Arabia (see above), in turn threatening Riyadh’s reported willingness to increase oil output next year; and b) there could be tougher enforcement of sanctions on Iran’s oil output. “If the conflict envelopes Iran… up to 3 per cent of global oil supply is at risk,” energy analyst Saul Kavonic told Reuters. “And if a wider conflict eventuates that ends up impacting transit through the Strait of Hormuz, around 20 per cent of global oil supply could be held hostage.” Cui bono? Putin.