Israel-Hamas Conflict Raises Concerns Over Global Oil Supplies Amid Already Strained Market

Oil prices surge as Israel-Hamas conflict fuels fears of broader Middle East disruptions; Potential Iranian involvement and potential tightening of sanctions on Tehran could further strain supply.

The ongoing conflict between Israel and Hamas is causing concern of potential disruptions in global oil and gas supplies, with worries of escalating hostilities drawing Iran, a significant player in the energy market, into the fray.
The increased volatility prompted by the conflict has so far resulted in a relatively mild surge in oil prices, but a major disruption could result in sharp price hikes, akin to those witnessed during the OPEC embargo in the 1970s.
Iran, despite being hampered by international sanctions, has substantially increased its oil production over the past year, contributing to global supply levels. Any tightening of sanctions on Iran or a blockade of the crucial Strait of Hormuz by Iran in response to the conflict could significantly impact the supply.
The war could also critically affect the regional natural gas market and potentially hamper Europe's LNG supply as winter approaches. Chevron has already suspended activities at its Tamar platform, off the Israeli coast, due to the conflict.
Despite the elevated oil prices, gas prices at US pumps have continued to decline due to the seasonality of the product and the effects of localized market factors. However, US oil production, currently at an all-time high, is an important determinant of the country’s energy security, prosperity, and freedom.