MANAMA: Mahmood Rafique, Editor: The Middle East conflict and Hurricane Milton have stirred the global energy market which currently is going through a period of significant uncertainty.
“Given the potential consequences of both, it is clear that the future direction of oil prices will depend on how these events unfold and how the world responds to them,” Mohamed Hashad, Chief Market Strategist, Noor Capital said while commenting on oil markets.
“Oil prices have been on a wild ride in recent weeks, driven by a perfect storm of geopolitical tensions and natural disasters. The escalating conflict between Israel and Iran, coupled with the devastating impact of Hurricane Milton on U.S. fuel supplies, has sent crude oil prices soaring.”
The Middle East, a region that accounts for a massive portion of global oil production, is once again a major source of market volatility. The ongoing war between Israel and Hamas, combined with the threat of a wider confrontation with Iran, has raised concerns about potential disruptions to oil supplies. Investors are closely monitoring the situation, as any escalation could lead to significant price increases.
As the situation in the Middle East remains uncertain and the impact of Hurricane Milton continues to unfold, oil prices are likely to remain volatile. Investors and consumers alike will be closely watching developments in these areas for clues about the future direction of the energy market.
Israel’s recent military strikes against Iran, targeting both civilian and military infrastructure, have further heightened tensions. Iran has vowed to retaliate, and the threat of a broader regional conflict is a real possibility. Such a scenario could have a devastating impact on global energy markets, as it could disrupt oil production, transportation, and refining operations.
The potential targets of Iranian retaliation include Saudi Arabian oil facilities, which are among the largest in the world. Any attack on these facilities could significantly reduce global oil supply and send prices skyrocketing. Additionally, the Strait of Hormuz, a narrow waterway through which a significant portion of global oil trade passes, could become a target for Iranian attacks. A closure of the Strait could have a catastrophic impact on the global economy.
Meanwhile, Hurricane Milton, which made landfall in Florida, caused widespread damage and disrupted fuel distribution. The storm knocked out power to millions, damaged critical infrastructure, and led to shortages of gasoline and other essential supplies. This unexpected surge in demand, combined with infrastructure disruptions, pushed gasoline prices higher and supported overall crude oil prices.
The impact of Hurricane Milton would be there for weeks to come, as the region recovers from the storm’s devastation. The damage to refineries, pipelines, and other energy infrastructure could lead to supply constraints and further price increases.
In addition to these geopolitical and natural factors, economic indicators from the U.S. and China are also influencing oil prices. The U.S. Federal Reserve’s potential interest rate cuts and China’s efforts to stimulate its private sector could boost economic activity and, consequently, fuel consumption.
In a nutshell, Middle East conflict can result in significant disruptions to global oil supplies, soaring oil prices, economic recession, inflation, energy shortages, and increased geopolitical tensions while Hurricane Milton could cause widespread power outages, fuel shortages, infrastructure damage, economic losses and increased insurance premiums.
