Hamas leader killed: Oil prices surge amid Middle East tensions

Hamas’ political leader, Ismail Haniyeh, was killed in Tehran early on Wednesday 31st 2024, according to Iranian officials, and Hamas blamed Israel for the targeted assassination. In fact, he was killed in a pre-dawn airstrike in Tehran with the Islamic State militant group blaming Israel for a shock assassination. This development threatens to escalate the conflict even as the United States and other nations scramble to prevent an all-out regional war. Iran’s supreme leader promised retaliation against Israel and also oil prices start to moving up.

Israel made no immediate comment, despite having promised to kill Haniyeh and other Hamas leaders following the group’s October 7 attack on southern Israel. The strike occurred shortly after Haniyeh attended Iran’s new president’s inauguration in Tehran, and only hours after Israel targeted a top commander of Iran’s ally Hezbollah in Lebanon’s capital Beirut.

The assassination of Hamas’ top political leader had the potential to be explosive in the midst of the region’s volatile, interconnected conflicts, due to its target, timing, and location in Tehran. The most dangerous possibility was that Iran would retaliate, bringing Iran and Israel into direct conflict.

Crude oil prices jump 3% for the first time in four days

Crude oil futures rose from two-month lows in European hours Wednesday 31st as tensions in the Middle East escalated, while lower US crude inventories also helped to keep markets stable.

Crude oil futures rose for the first time in four sessions, as the assassination of a top Hamas leader in Iran fuelled fears of further Middle Eastern tensions.

U.S. light sweet crude oil futures (CL00) climbed nearly 3%, or $1.98, to $76.76 per barrel after Iran claimed Hamas political leader Ismail Haniyeh was assassinated while in Tehran for President Masoud Pezeshkian’s swearing-in. Haniyeh died hours after Israel reportedly assassinated Hezbollah’s senior military commander Fuad Shukr in Beirut. Hezbollah maintains close ties with Iran. According to Deutsche Bank strategist Henry Allen, oil reached a year’s high after Iran launched an aerial assault on Israel.

Hamas leader’s death fuels price surge amid middle east tensions

Oil prices rose after Hamas claimed Israel killed its political leader, escalating tensions in a region that produces roughly one-third of the world’s crude.

West Texas Intermediate returned to above $76 per barrel, while Brent also advanced. The whole Israel-Hamas conflict has escalated since last weekend, when a Hezbollah strike in Israel-controlled Golan Heights killed 12 children, which could damage the continuing cease-fire talks between Israel and Hamas.

On Tuesday 30th, Brent call volumes reached their highest level since early June, indicating that oil traders are hedging against further conflict. The market volatility index is also at its highest level since the beginning of the summer.

“The details are still emerging from Iran, with the market allocating a higher risk premium for oil,” wrote ING analysts Ewa Manthey and Warren Patterson.

The market has assessed the risk of further escalation affecting production and exports, especially from Iran. Crude prices have not reacted particularly strongly to the latest events in the war, which has been ongoing since early October 2023.

Futures are still on track for a monthly drop in July, with Brent down nearly 7%.

Away from the Middle East, the Petroleum Institute of America stated that crude inventories decreased by 4.5 million barrels during the past week. This would mark an extended period of decline since January 2022.

The OPEC+ committee meeting as well as a Federal Reserve interest rate meeting is very interesting for traders to keep an eye on, although it is expected to leave rates unchanged.

Geopolitical uncertainty and refinery issues push oil prices up

The high-profile attack on Iranian territory was viewed as potentially escalating hostilities between Tehran and Jerusalem, which analysts have previously predicted could have a negative impact on oil markets through supply disruptions.

Tensions were already rising after Israel launched strikes on Beirut in response to Hezbollah’s attack on Israel the previous weekend.

The latest American Petroleum Institute report, which showed crude stockpiles falling by another 4.5 million barrels last week, also boosted markets earlier.

At the same time, gasoline and distillates fell following ongoing refinery problems caused by Hurricane Beryl earlier in the month.

Meanwhile, loading programs predict that production of the five regionally generated grades that support the North Sea Dated Brent physical benchmark will be on average around 540,000 bpd in September. This is consistent throughout the month as producers wrap up summer maintenance schedules.

FTSE 100 jumps as oil prices soar after Hamas leader’s assassination

The FTSE 100 rose more than a hundred points on the morning of Wednesday 31st, owing to the assassination of two Hamas and Hezbollah leaders, which boosted the index’s energy and commodities constituents.

Shares of BP and Shell both rose by two to three percent in early morning trading, assisting the index as a whole to rise by 1.5 percent within three hours of market opening.

The market surged following the deaths of two senior Hamas and Hezbollah officials.

The news of Haniyeh’s death also pushed the oil price higher, as fears of regional escalation grew following days of tension between Lebanon and Israel.

Brent crude, the international benchmark, rose 2.5 percent to more than $80 per barrel following the news, while WTI crude rose 2.8% as of 10:30 a.m. UK time.

London’s morning surge came despite another day of testing trading on the S&P 500, which fell 0.5% on Tuesday due to more losses in big tech stocks.

China’s decline in fuel demand impacts oil prices

Slowing fuel demand in China, the world’s largest crude oil importer and the primary driver of global demand growth, is also weighing on oil markets.

China’s manufacturing activity fell for the third consecutive month in July, according to an official factory survey released at the end of July, fuelling expectations that Beijing will need to introduce additional stimulus measures as a prolonged property crisis and job insecurity stymie growth

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