Crude oil prices see a 1% surge following Israeli action in Qatar
In a significant turn of events, Israel carried out an attack on Hamas leadership in Doha, Qatar, on October 7, 2023. The incident, strongly condemned by Qatar and other countries, has raised regional tensions and cast doubt on Qatar’s mediating role in Israeli-Palestinian negotiations.
The Israeli military attack resulted in the death of six people, according to local authorities. Israel claims its campaign in Gaza is self-defense after an attack by Hamas on October 7, 2023. The attack was condemned by Saudi Arabia, the United Arab Emirates, the Arab League, Germany, and other nations, while the US urged Israel to exercise caution.
The attack on Qatar is a major setback to recent diplomatic initiatives to resolve the Palestinian conflict, according to Rystad Energy analysts. Jorge Leon, head of geopolitical analysis for Rystad, stated that "what was a fragile negotiation track now appears to be closed, dimming prospects for a near-term resolution of the conflict."
The incident has also had an impact on global oil markets. Brent crude futures rose 1.1% to $66.76 a barrel, while U.S. West Texas Intermediate crude futures also climbed 1.2% to $63 a barrel. Oil traders are focusing on the latest round of U.S. weekly inventory reports, due on Wednesday, and monthly reports from OPEC and the International Energy Agency due Thursday.
Expectations that China will continue stockpiling oil and concerns over potential new sanctions against Russia also contributed to the rise in oil prices. Oil benchmarks were already trading higher prior to the attack on Qatar, supported by the latest oil output increase from OPEC+ being smaller than anticipated.
The attack on Qatar is not the first time Israel has launched attacks as part of its nearly two-year campaign in Palestine. Previously, Israel has attacked Iran, Syria, Lebanon, and Yemen.
Meanwhile, the U.S. employment data for the 12 months through March was revised lower more sharply than expected on Tuesday, prompting traders to bet that the Federal Reserve will cut short-term rates next week and continue with more cuts this year to support the labor market. Lower interest rates can reduce consumer borrowing costs and boost economic growth and demand for oil.
Analysts have called Israel's military campaign a major escalation across the Middle East. StoneX analyst Alex Hodes stated that the escalation could cause a response for more Arab nations to take a harder stance on Israel. Some analysts argue that the attack undermined progress toward a diplomatic solution to the Gaza conflict.
The attack on Qatar, a major global energy exporter, was also condemned by Iran, the United Arab Emirates, Turkey, Saudi Arabia, and de facto leader of the OPEC+ group of oil exporters. Qatar condemned the attack as "cowardly" and called it a violation of international law.
The fallout from the attack on Qatar continues to unfold, with regional tensions heightened and the prospects for a near-term resolution of the Israeli-Palestinian conflict appearing dim.
