Amidst the escalating conflict of Israel vs Palestinian group Hamas, crude oil prices experienced a sharp surge on Monday. This rise was fueled by concerns over potential disruptions in supplies due to the ongoing military clashes. Brent Crude prices increased by over $3 per barrel, nearly touching the $87 per barrel mark during Monday's trading.
Last week, crude prices had witnessed a correction of about 9% from the year-high. This correction followed a decision by the oil cartel OPEC to maintain steady output cuts during its meeting on October 5. Analysts are wary that geopolitical tensions in West Asia could escalate further, potentially keeping oil prices elevated for some time.
However, experts believe that while the conflict poses a risk, it is unlikely that crude oil prices will sharply rise and sustain at elevated levels. Even if the situation between Israel and Palestine continues, it's improbable that prices will go beyond $100 per barrel.
Deven Choksey, Managing Director of KR Choksey Shares and Securities, emphasized that OPEC nations are cautious not to allow oil prices to rise beyond 10-12%. They have an informal understanding with the US to ensure stability in oil prices. Hence, while there may be a knee-jerk reaction causing a 10-12% increase in prices in the near term, a significant and prolonged surge seems unlikely.
Shrey Jain, the CEO of SAS Online, echoed this sentiment, indicating that any immediate spike in oil prices might be short-lived. He mentioned that if the conflict spreads to more countries in the Middle East, which have big oil fields like Iran, it could make global markets go down.
Rahul Kalantri, VP of commodities at Mehta Equities, believes the surge in crude oil prices is likely to be temporary. Neither Israel nor Palestine is a major oil supplier, and the conflict has not directly threatened major oil production or supply facilities. However, he added, if the conflict lasts a long time, it might affect crude oil prices in the short term, because it's geographically close to major oil-producing & exporting nations.
To sum up, while people are keeping eye on the Israel-Hamas situation and how it might change oil prices, the smart thing is to be careful and talk to experts before deciding where to invest your money.
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