A general view of the towers and oil platforms of Venezuela's state oil company, PDVSA.
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Oil prices did not react sharply on Monday after Hezbollah confirmed the killing of its leader on Friday in an Israeli air strike in the Lebanese capital, Beirut.
Over the weekend, the Israeli military reported that Hassan Nasrallah, who led the Iran-backed Hezbollah group for more than thirty years, was killed on Friday during a “targeted strike” on the group’s headquarters in Beirut.
Hezbollah, designated as a terrorist organization by several countries including the United States and the United Kingdom, is known for its violent opposition to Israel and resistance to Western influence in the Middle East, according to the US Director of National Intelligence and the London Assembly.
The incident comes after several months of conflict and has raised fears of a broader conflict involving Iran. The Israeli military described Nasrallah as the group's “central decision-maker” and “strategic leader.”
But oil markets did not witness a significant rise. The Brent global index added 1.56% to $73.10 a barrel, while US West Texas Intermediate crude futures traded 1.09% higher at $68.19 a barrel.
While hostilities have escalated across the Middle East, there has been no disruption to oil supplies, noted Andy Lipow, president of Lipow Oil Associates.
“The oil market is not anticipating an all-out war between Iran and Israel that would impact supply,” he told CNBC via email.
Since the conflict between Hamas and Israel that began last year, disruption to the oil market has become limited. Lippo explained that the oil market also remains under pressure as increased production from the US, Canada and Guyana has increased the supply picture, in addition to Chinese demand stalling while OPEC+ has delayed the restoration of production cuts.
Josh Young said: “Eliminating Hezbollah leadership could trigger a reaction that would impact oil supplies, but since it did not directly impact (oil supplies)… the oil market likely will not bear much additional risk at the time.” present”. , CIO of Bison Interests.
However, both experts noted that rapid escalation in the conflict could lead to crude oil prices reaching $100 per barrel.
Lippo said that the biggest risk to the oil market is the closure of the Strait of Hormuz. He added that oil prices are unlikely to jump by $30 per barrel if that happens.
“If events escalate quickly, any material disruption to Iranian oil supplies or oil exports through the Strait of Hormuz could send oil prices above $100 per barrel,” Young said.
The Strait, located between Oman and Iran, is a vital channel through which about a fifth of global oil production flows daily, according to the US Energy Information Administration. It is a strategically important waterway that connects crude oil producers in the Middle East to major markets around the world.
Tens of thousands of people on both sides of the Israel-Lebanon border were forced to evacuate their homes due to cross-border shooting in the months following Hamas' attack on Israel on October 7, with Hezbollah throwing its support behind the Palestinian militant group. agitation.
