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Israel-Hamas conflict: How Will It Impact Market

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Oil Prices Surge as Hamas Attacks Israel

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Bloomberg Oct 9, 2023 13:45 · 11k Views

Oil surged after Hamas’s surprise attack on Israel raised fears of a wider conflict. Investors avoided traditionally risky assets such as stocks and instead bought gold, bonds and the dollar. Bloomberg's Stuart Livingstone-Wallace reports.

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Transcript

  • 00:00 Crude oil rallying after Hamas a surprise attack on Israel.
  • 00:03 The threat of US and Iran Entanglement growing especially if action is taken against Tehran.
  • 00:08 Soggen wanking on the market implications right in this in terms of risk premium, we see an increase of five to $10 per barrel.
  • 00:15 The risk of escalation is real.
  • 00:16 And while Iran may not have nuclear weapons, it does have a stranglehold on the Straits of Hormuz through which 20 to 30% of global crude oil flows.
  • 00:25 Joining us now.
  • 00:25 A man who knows a little something about a crude market.
  • 00:28 Stuart Wallace
  • 00:29 out of Dubai.
  • 00:30 Stuart, you and the team, if you look at things right now,
  • 00:32 have you changed your expectations on crude supply coming out of the region?
  • 00:37 Not so far.
  • 00:38 I mean I it is absolutely true to say they have a stranglehold overhaul moves, but you know with the proviso that
  • 00:43 no one has ever successfully managed to take Hormuz down for any length of time.
  • 00:46 So you can definitely make life more difficult.
  • 00:49 But I was also argue in the long term it's not necessarily the interest of Iran to do that.
  • 00:53 I mean for one thing, just a reminder to everyone, you've got the US Fifth Fleet sitting up in Myanmar,
  • 00:57 not that far away.
  • 00:58 Is that really sort of a bear you want to prod?
  • 01:01 I think the second leg of it, which is tougher sanctions, you know, or or or at least again more careful control of what's coming out of Iran.
  • 01:08 You know, there is, that certainly is a possibility and there's a time when OPEC is still constraining supply that would clearly have a more immediate impact on the market.
  • 01:15 So I think it's those two factors, but of the two of them,
  • 01:18 the more likely approach at least for now seems to be on the sanctions.
  • 01:22 But again, we'll watch and wait, Stuart, how much crude has been coming out
  • 01:26 of Iran
  • 01:27 over the last year or so?
  • 01:28 And has the administration been turning a blind eye to that?
  • 01:32 Yeah, I wouldn't, I wouldn't necessarily.
  • 01:33 It's a blind eye.
  • 01:33 But yes, it is up sharply and it's definitely been a big factor in the market.
  • 01:37 I mean, I think most of one of your previous guests said it's something in the order of about 50% over the last 12 months higher.
  • 01:43 And the expectation is that that would continue to go higher.
  • 01:45 Now
  • 01:46 clearly the calculus has changed in the last few days
  • 01:49 and we're really watching Washington to see how they're going to react to this.
  • 01:53 Again, that will take several weeks or several months to play out.
  • 01:57 At the same time, you've got this big calculation to make about how then in turn does OPEC react, Saudi Arabia in particular,
  • 02:03 it's got a quite a great deal of spare capacity right now.
  • 02:06 But it's not quite clear what the appetite in Riyadh
  • 02:09 is at the moment.
  • 02:09 In a scenario where Iran is constrained,
  • 02:12 does Riyadh,
  • 02:13 Riyadh then reopen the spigots?
  • 02:16 It's very hard to gauge today what that reaction might be, Stuart.
  • 02:19 Thank you, Sir.