Myra P. Saefong, assistant global markets editor, has covered the commodities sector for MarketWatch for 20 years. She has spent the bulk of her years at the company writing the daily Futures Movers and Metals Stocks columns and has been writing the weekly Commodities Corner column since 2005.
Oil futures headed lower Wednesday for a second session in a row, with traders awaiting any sign the Israel-Gaza war will spill over to threaten crude supply.
Israel isn’t a major oil producer, but investors are focused on whether the conflict escalates. The Wall Street Journal on Sunday reported that Iranian military officials helped plan and coordinate the Hamas attack. White House national security adviser Jake Sullivan has described Iran as “complicit” in the attacks, having long provided funding and training to Hamas, but has said the U.S. so far hasn’t had confirmation Tehran had advance knowledge of the attack.
“Before the attacks, the U.S. had adopted a softer posture toward Iran, allowing it to approach pre-2018 levels of oil production,” said Hakan Kaya, senior portfolio manager at Neuberger Berman, in an emailed blog post. “However, given recent events and Iran’s known support for Hamas, the U.S. may adopt a stricter stance, potentially leading to a reduction in Iranian oil supply.”
The latest developments “could potentially affect Saudi oil production plans, leading them to extend their existing cuts for a longer period, which could further deplete already low global oil inventories,” he said.In a note, analysts at ING wrote that “if the conflict is contained to Israel and Hamas we would expect the current risk premium to slowly erode. However, there is still a risk that this escalates, particularly if there is any Iranian involvement.
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