The Guardian newspaper published a report on the impact of the war waged by Israel in the Gaza Strip on global oil prices.

Global markets witnessed significant fluctuations in oil prices after the outbreak of the war, and prices rose sharply for two consecutive weeks since the operation "Al-Aqsa Flood" launched by the Palestinian resistance led by the Qassam Brigades, the military wing of Hamas, against the occupation on the seventh of October.

The war led to tremors in oil markets, a rise in prices to $94 a barrel, and reinforced fears among oil traders and economists that markets could exceed the $100 per barrel level.

Many worry that escalating tensions in the region could lead to a dramatic rise in oil prices by choking off a key transit route for seaborne oil and gas shipments from the Middle East to the global market, threatening efforts by central banks to tame high inflation.

Have oil and gas supplies been affected?

The recent rise in oil and gas prices has been driven by fears that exports from the energy-rich region could be disrupted, but so far oil and gas flows have remained unscathed despite the Israeli war on Gaza.

Although Israel does not have large gas reserves, it has halted production at the Tamar gas field, which has limited gas flows to neighboring Egypt, which re-exports it by sea, often to Europe.

Despite record high gas storage levels in Europe this winter, gas prices rose this week after a tanker seeking to fill Egypt's LNG was left empty and diverted into a port in Algeria, raising concerns about Europe's gas supplies.

The Strait of Hormuz passes through which more than 20% of the world's oil consumed and a third of the world's seaborne gas shipments pass through it (Reuters)

Escalation of the war

Robert Ryan, chief strategist at BCA Research, said there is a chance of one in four that Iranian oil production could drop by one million barrels per day as a result of US sanctions that could be imposed on Tehran "as a supporter of Hamas," which could push crude prices up to $4 a barrel next year.

Robert Reale added that the impact of these sanctions could be mitigated if Saudi Arabia increased its exports to help stabilize the market.

Neil Quilliam, an expert in energy policy and geopolitics, said, "There is no shortage of oil supplies, it is about getting supplies to the market. The real concern is the security of the Strait of Hormuz."

The Guardian: Higher oil prices could mean Biden's defeat in the upcoming elections, while Russia will be a boost to its treasury in light of its war on Ukraine

The report notes that the Strait of Hormuz is responsible for the transit of more than 20% of the oil consumed globally and a third of the world's seaborne gas shipments, making it a vital energy artery for global markets.

"It is unlikely that the strait will be closed, but military activities in the region will be enough to raise oil prices towards very high levels for at least a short time," Quilliam said.

Saudi Arabia, OPEC's largest producer at an estimated 9 million barrels per day (Shutterstock)

Major producers

Saudi Arabia is the strongest fuel player in the region, currently producing about 9 million barrels of oil per day, while Iran and the UAE produce more than 3 million barrels of oil per day each. Russia, OPEC's main ally, produces more than 9 million barrels of oil per day.

A skyrocketing oil price would bring significant economic rewards to these countries, but only to a certain extent, according to William.

Once prices move significantly above $100 a barrel, the rising cost of energy could cause economic activity to slow and demand for oil to fall, and this could provide an incentive for Saudi Arabia to increase its production to rein in runaway oil market prices.

According to the report, Saudi Arabia and Russia had confirmed about a month ago that they would continue to cut 1.3 million barrels of oil per day until the end of the year to support crude prices, which were falling.

The report said that higher oil prices could mean defeat for US President Joe Biden in the US elections next year, while Russia will be a boost to its treasury in light of its war on Ukraine.