Column: Oil prices lack strength as risk indicators for the Middle East crisis

August 1, 2024 6:34 PM GMT+9 (some excerpts)

Oil prices are often viewed as a yardstick for geopolitical risk. Therefore, the fact that North Sea Brent oil prices only rose 2.5% on the 31st can also be interpreted as traders not being excessively concerned about the spread of war in the Middle East despite the assassination of Haniya, the supreme leader of the Islamic organization Hamas in Iran. However, there is a possibility that this interpretation does not capture the full picture.
At first glance, oil traders seem optimistic about the situation. Despite the protracted war in the Palestinian Autonomous Region of Gaza, crude oil prices have generally remained within the range of 75-85 dollars per barrel since the beginning of the year, according to the Oxford Energy Research Institute. When Iran launched hundreds of missiles at Israel in April, North Sea Brent oil's initial reaction was a drop in the market price. This is in stark contrast to the 30% jump in February 2022 when Russia invaded Ukraine.