With a war officially underway in the Middle East between Israel and Hamas, many nations are concerned about economic shocks that could reverberate around the globe from the oil-rich region. The conflict between the nations initially sent oil prices soaring, but those prices could fluctuate depending on the war’s direction in the coming days.
“Any geopolitical tension, especially in the Middle East here where most of the production of the world comes from, if you see any tension in this region, you see an immediate increase in the price of oil,” said Amena Bakr, chief OPEC correspondent and deputy bureau chief at Energy Intelligence. “The threat that any of these conflicts has on supply, of course, means we are going to see a volatile environment and possibly a higher oil price.”
Though Palestine and Israel are not considered major oil producers, the war is happening in a region that leads the world in oil production. With Saudi Arabia — a nation producing more oil than all nations except the United States — near the fighting, the concern is that as the war escalates, it will impact the Middle East’s oil supply, driving up prices at the pump.
According to a USA Today report, despite the fighting between Israel and Hamas, gas prices in the U.S. could continue to drop for the next few weeks.
Patrick De Haan is a petroleum analyst for GasBuddy, a gas price tracking site. Before war broke out, De Haan said on X, formerly known as Twitter, that the average price at the pump was down to $3.72 per gallon, and he expected that number to continue to drop in October.
On Monday, Oct. 9, De Haan said he is still cautiously hopeful gas prices will continue to drop, despite the newly declared war.
“Even with oil prices rising as a reaction to the attacks, I remain optimistic the national average could decline another 25-45 cents by late November, with prices potentially falling nearly triple that in California,” De Haan said.
After the attacks, the price of crude oil jumped, but a GasBuddy analysis indicates this could be a knee-jerk reaction that won’t be sustained unless fighting spreads to major oil-producing countries.
On Sunday, Oct. 8, The Wall Street Journal cited senior members of Hezbollah and the Palestinian terrorist group Hamas, who claim Iran — a major producer of oil — helped Hamas plan the attack on Israel. On Monday, Oct. 9, Iranian officials denied involvement in the attacks.
The reports, if true, could lead to a broader conflict. De Haan said that if the fighting does spill into Iran, it could increase the cost of crude oil. Goldman Sachs said Iranian oil production could fall with the potential for further sanctions on Iran.
On Sunday, Oct. 8, President Joe Biden condemned the most devastating attack on Israel in decades and announced the U.S. is sending military resources to Israel, including ships and aircraft like the USS Gerald R. Ford carrier strike group.
