The ongoing Israel-Hamas conflict has triggered a surge in oil prices, leading to Shell’s share price reaching a historic high. As tensions in the Middle East persist, the impact on the energy market and global economy has become increasingly significant.
Over the past week, oil prices have experienced an increase due to the outbreak of the Israel-Hamas conflict. Brent crude oil prices have risen by over 7%, surging past $90 per barrel.
On Monday, Shell’s shares saw a 1.5% increase, pushing its stock price to 2,763p per share. This upward trajectory continued as Shell’s share price rose by 6.5% during the same period, contributing to a nearly 10% increase in the company’s commercial value, which now stands at £183 billion, since 4 October.
Seema Shah, Chief Global Strategist at Principal Asset Management, emphasised that the key concern for the energy market is its reaction to the ongoing tensions. While Brent crude prices have not seen a significant rise thus far, a further escalation in the conflict could exert additional upward pressure on oil prices.
Ricardo Evangelista, a senior analyst at ActivTrades, pointed out that Friday’s sudden price increase was a result of traders considering the developments in Israel and assessing the potential disruption to the global oil supply chain caused by the conflict.
There remains significant uncertainty regarding the possibility of the conflict spreading and affecting major oil producers in the region. Consequently, oil prices are likely to remain high as long as this uncertainty prevails, providing continued support for the price of a barrel.
Shell has faced persistent criticism for the past 18 months for reporting substantial profits, driven partly by the increase in global energy prices resulting from Russia’s invasion of Ukraine.
The International Energy Agency (IEA) recently stated that, as of now, the Israel-Hamas conflict has not directly impacted physical energy supply. However, it acknowledged that participants in the energy market will remain anxious and watchful as the crisis unfolds. In its latest report, the IEA highlighted that in the context of closely balanced oil markets, the international community would continue to closely monitor risks to the flow of oil in the region.
Analysts previously predicted that oil prices might approach $100 a barrel. However, several factors could hinder a sustained rally above that level. These factors include an expected increase in non-OPEC production, Russia’s need to raise supply to boost revenue, and the potential for a slowdown in oil demand due to already high-interest rates in major Western economies.
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