Oil price volatility amid Israel-Hamas war raises inflation fears

THE Israel-Hamas war, which erupted on Oct 7, 2023, has sent shockwaves across the world.

Unlike the spike in oil prices that followed Russia’s invasion of Ukraine last year, the fighting between Israel and Gaza does not directly involve oil-producing nations. Israel for instance, has almost no domestic crude production, and imports around 220,000 barrels per day (bpd) of crude. Moreover, it has only two oil refineries with a capacity of just under 300,000 bpd.

However, the risk today is that the localised conflict in Gaza could turn into something far more serious. This would involve a broader regional conflict, such as Iran being dragged into the conflict. Iran’s foreign minister has already called for a full and immediate boycott of Israel by Muslim countries, including an oil embargo on the country.