Market Analyst: Oil prices are expected to "rise" on Monday, with limited overall impact, but the premise is "not to escalate".

Under the background of the Israeli-Palestinian conflict, international crude oil prices may soar in the short term on Monday. However, energy experts believe that the overall impact of this event on the oil market is limited, provided that the conflict does not escalate further.

Analysts pointed out that Israel and Palestine are not major oil-producing countries, but the conflict is taking place in a broader major oil-producing region. Investors need to be alert to the risk of further escalation of the conflict. The extent of Iran's involvement will be a key factor affecting international oil prices.

Vandana Hari, CEO of Vanda Insights, told the media:

"When the market opens on Monday, we may see oil prices rise 'subconsciously'.

There will be some risk premium until the market is convinced that this event will not trigger a chain reaction and that oil and gas supplies in the Middle East will not be affected."

Iman Nasseri, Director of Energy Consulting for the Middle East at Facts Global Energy, told the media:

"The impact on oil prices will be limited unless we see the 'war' between the two sides quickly escalate into a regional war involving the United States, Iran, and other supporting countries."

Currently, Israel has two refineries with a total capacity of nearly 300,000 barrels per day. According to data from the U.S. Energy Information Administration (EIA), the country has almost no crude oil and condensate production. According to EIA data, the Palestinian territories have no oil production.

Vandana Hari, CEO of VANDA INSIGHTS, said that although this conflict will not directly affect oil production, it still occurs in a gateway region of an important oil production and export region. Investors need to be aware of the risk that the Israeli-Palestinian conflict "may escalate into a regional conflict."

Iran is the key factor

Pierre Andurand, a well-known oil and energy trader at Andurand Capital, said that because the Levant region is not a major oil-producing region, this war is unlikely to affect oil supply in the short term. Therefore, people should not expect a significant increase in oil prices in the coming days, but it may eventually have an impact on supply and prices:

At the time of this conflict, oil supply is already in a predicament-global inventories are already low, and the production cuts by Saudi Arabia and Russia will further reduce inventories in the coming months.

The market will eventually have to seek more Saudi supply, but I believe this will not happen unless the Brent crude oil price is below $110.

Andurand added:

In the past six months, we have seen a significant increase in Iran's supply due to ineffective sanctions enforcement...

(In the future,) the U.S. government is likely to start imposing stricter sanctions on Iran's oil exports. This will further tighten the oil market. And this also means that the possibility of direct conflict with Iran is not zero. Wall Street Journal has also mentioned before that, for international oil prices, the extent of Iran's involvement will be the "key factor":

If Israel concludes that Iran is responsible for the attacks on Hamas, oil prices could rise significantly.

If Iran finds itself under attack by Israel or the United States, it may take retaliatory measures.

Even if Israel does not take immediate action against Iran, Iran's oil production could still be affected.

Since the end of 2022, Washington has turned a blind eye to the surge in Iran's oil exports. At that time, Washington's priority was to ease relations with Iran and initiate informal negotiations. As a result, Iran's oil production has increased by nearly 700,000 barrels per day this year, becoming the second largest incremental supply source in 2023, second only to US shale oil. Now, the White House may reimpose sanctions, which could push oil prices up to $100 per barrel or even higher.