Not surprisingly, the attacks by the Palestinian Islamist movement Hamas and, in response, Israel's declaration of war, are shaking up the oil market. Oil prices jumped more than 5% in Asia on Monday morning before falling back to above $87 a barrel of Brent crude in the late morning, an increase of more than 3%. The ongoing fighting is exacerbating political uncertainty in the Middle East, a key region for the world's oil supply. Israel and the Palestinian territories are not oil producers, but the Middle East region accounts for nearly a third of the world's supply. And Hamas' assault on Israel is the sharpest escalation of violence between the two sides in decades.
Markets are therefore trying to measure the impact of tensions in the region on exports. So the questions are many: Will the situation get worse? Will the conflict remain limited to Israel and Palestine, or will it spread to countries in the region, particularly Saudi Arabia, the world's largest crude exporter today?
The impact on global oil supply...
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