Oil Prices Volatile as Middle East Conflict Continues
Oil Traders Racing from One Headline to Another
Oil prices experienced a turbulent week as traders anxiously followed the ever-changing Middle East conflict. Despite intense mediation efforts by global powers, including the United States, the warring parties of Israel and Hamas remained far from a solution. With each new headline, oil traders found themselves uncertain about the direction of the conflict.
Uncertainty Surrounds Ceasefire and Ground Invasion
Reuters reported that an official from the militant Hamas group conditioned the release of hostages in Gaza on a ceasefire in Israel’s bombardment of the Palestinian enclave. Israel, on the other hand, indicated its preparations for a ground invasion. Calls from the US and Arab countries to delay such an operation highlighted concerns about civilian casualties and the potential for a wider conflict.
Expert Opinion: “It’s a Mess”
John Kilduff, a partner at the New York energy hedge fund Again Capital, described the situation as a “mess.” He emphasized that oil traders were struggling to predict the outcome of the conflict and were constantly reacting to the latest news. Despite the uncertainty, Kilduff noted that the high volatility provided opportunities for traders who specialize in market fluctuations.
WTI and Global Crude Prices
At the end of the week, New York-traded WTI crude for December delivery settled at $85.54, representing a 3% loss for the week. Similarly, UK-origin crude for December delivery settled at $90.48, showing a nearly 2% drop for the week. Throughout the week, both benchmarks experienced significant fluctuations, with gains being quickly reversed.
Increasing Tensions and Regional Spillover
Oil prices regained momentum after Israeli forces launched a major ground attack on Hamas. While a full ground invasion was temporarily halted due to mediation efforts, the threat of Iran’s involvement in the conflict loomed large. Tehran, a strong supporter of Hamas, has been provoking its ally, the United States, since the beginning of the war. The situation was further complicated by projectiles hitting Egyptian Red Sea towns, indicating the potential for regional spillover.
(Peter Nurse and Ambar Warrick contributed to this article)
