Oil Records Second Weekly Loss Despite War on Gaza

Oil prices are heading for their second weekly loss as the war between Israel and Hamas remains under control, and signs of weak demand emerge.

Brent crude oil, which is seen as an indicator of the global market, stabilized near $87 per barrel, after jumping by 2.6% on Thursday amid the weakness of the dollar and the Federal Reserve hinting at stopping monetary tightening policy, while the price of West Texas Intermediate crude oil slightly exceeded $82 per barrel.

Israel said that its forces were camped around the Gaza Strip, and that a ceasefire was not among the options offered, despite US President Joe Biden's call for a temporary ceasefire to allow the release of more hostages.

However, there are still risks looming due to the possibility of the conflict spreading to other countries and impacting oil markets. The Iran-backed Houthis in Yemen launched missiles and drones at Israel, and the Saudi army also clashed with the armed group.

“The potential for Iran-backed Hezbollah to open a new front in the war between Israel and Hamas remains the key vulnerability that could allow the conflict to escalate,” Vivek Dhar, an analyst at the Commonwealth Bank of Australia, wrote in a note. “We believe that any direct Iranian involvement in the war between Israel and Hamas "It will initially raise Brent crude futures to $100 per barrel."

Oil prices have lost most of the war premium they achieved since the outbreak of clashes, because the conflict has not yet posed a threat to the supplies of the Middle East region, which provides about a third of the world's oil production.

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