The Israel-Hamas conflict, characterized as a ‘black swan event’ in the oil market, holds the potential to propel oil prices to $150 per barrel. This possibility is rooted in the specter of regional entanglement, particularly involving Iran. Apprehensions surround Iran’s potential support for Hamas through advanced weaponry, further escalating the conflict. Moreover, Iran’s influence on Hezbollah may open a second front against Israel, possibly prompting Israeli strikes on Iran. In response, Iran could opt to close the Strait of Hormuz, a vital global oil passage. Such an act would disrupt oil supplies, leading to price surges and contributing to inflation via increased energy costs.
The world of commodity trading stirred uneasily as the Israel-Hamas conflict unfurled unexpectedly, leaving market observers with no choice but to acknowledge its reverberations. While some may argue that this tumultuous event has had a limited impact on global oil prices and the broader economy, a closer inspection reveals a more complex reality.
In the wake of the Hamas attack on Israel, oil prices initially surged, only to retreat by day’s end. However, as the saying goes, appearances can be deceiving. This Israel-Hamas conflict, in its unpredictability, resembles a black swan event in commodity markets, a term coined by Nassim Nicholas Taleb to describe highly improbable and unforeseen events that have a profound impact on markets and society. It caught not only traders but also central banks, particularly the Federal Reserve, off-guard as they grapple with spiking US Treasury yields and inflation, euphemistically labeling it as “transitory.” In stark contrast, this Israel-Hamas conflict appears far from transitory, already spilling over its borders. If this situation escalates regionally, the disruption to energy supplies could push oil prices to the ominous $150 per barrel mark, prompting concerns about inflation and a potential economic downturn.