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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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IEA: Oil Market “On Tenterhooks” Over Hamas-Israel War

  • In the words of the IEA, the oil market is on tenterhooks after the Hamas attack on Israel sent geopolitical risk climbing this weekend.
  • More than one-third of the world’s seaborne oil trade passes through the Middle East, meaning an escalation could significantly impact supply.
  • Alongside highlighting supply risks, the IEA raised its oil demand growth estimate for 2023 but lowered it for 2024.
oil market

The oil market is on edge over the escalation of geopolitical risk in the Middle East after this weekend’s attack by Hamas on Israel, with uncertainties about how events will unfold or how far the conflict could spread, the International Energy Agency (IEA) said on Thursday.

“A sharp escalation in geopolitical risk in the Middle East, a region accounting for more than one-third of the world’s seaborne oil trade, has markets on edge,” the IEA said in its closely-watched Oil Market Report for October published today.

Oil prices surged on Monday after the weekend attack by Hamas on Israel rekindled tensions in the Middle East and the war premium in the market returned.

“While there has been no direct impact on physical supply, markets will remain on tenterhooks as the crisis unfolds,” the IEA said in the report.

Amid many uncertainties in the conflict, and “Against a backdrop of tightly balanced oil markets anticipated by the IEA for some time, the international community will remain laser-focused on risks to the region’s oil flows,” the Paris-based international agency said.

While warning that the heightened tensions in the Middle East could pose risks to the oil market, the IEA raised slightly its 2023 oil demand growth estimate to 2.3 million barrels per day (bpd), up from 2.2 million bpd growth expected in the September report.

However, the agency lowered its demand growth estimate for 2024 by around 100,000 bpd, due to expectations of slowing economies and energy efficiency weighing on oil consumption. The IEA sees next year’s oil demand growth at 900,000 bpd now, down from the 990,000 bpd increase expected in last month’s report.

“Global oil demand growth is set to slow to 900 kb/d in 2024 as the post-Covid rebound runs out of steam while the economic expansion slows and energy efficiency improvements weigh on oil use,” the IEA said.  

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on October 12 2023 said:
    It is natural for the oil and energy markets to get on edge whenever there is an escalation of tension or fighting anywhere in the Middle East. The reason is that the Middle East particularly the Gulf region is home to more than 60% of the global proven oil reserves and 48% of the proven gas reserves. Whenever there is trouble, there is always a potential risk of supply disruptions.

    Although Brent crude price rose by $2-$3 a barrel immediately after the Hamas attack on Israel, the impact on the global oil market and prices has been relatively mild so far.

    However, the whole situation could change drastically if both Israel and the United States accused Iran with helping Hamas plan the attack. If Israel and the United States decide to punish Iran by attacking its oil infrastructure (refineries and production installations) or nuclear installations, then there could be a wider war in the Middle East and this will definitely affect the global oil market seriously possibly sending Brent crude beyond $150 a barrel particularly if Iran manages to block the flow of oil through the Strait of Hormuz.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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