Israel-Hamas war sends oil prices soaring; India keenly monitoring scenario

 Israel-Hamas war sends oil prices soaring; India keenly monitoring scenario

International crude oil prices rose sharply on Monday as a result of the armed conflict between Israel and the Palestinian militant group Hamas. India, on the other hand, said that it is monitoring the "situation carefully" and would respond to it maturely.

Brent for the month of December was trading at $86.67 a barrel on the Intercontinental Exchange (ICE), up 2.47% from its previous finish. West Texas Intermediate (WTI) increased its November contract by 2.79% to $85.10 per barrel. Prices increased by more than 4% during Monday's early trading.

Hardeep Singh Puri, the minister of petroleum and natural gas, told reporters on Monday that "India would manage it with maturity. The remark made by the Indian prime minister is unequivocal. Where the activity is taking place is, in many ways, the center of the world's energy in terms of energy. We shall thus keep a close eye. And I believe that we can handle this as we go along.

He said, citing organizations like the Global Biofuels Alliance, saying these types of uncertainties promote the transition to sustainable and cleaner fuels.

The latest escalation in the Israel-Palestine conflict, according to Sharad Chandra Shukla, director at Mehta Equities, has created concern in the markets, driving up the price of petroleum and hardening US Treasury rates.

According to Ravindra Rao, head of commodity research at Kotak Securities Ltd Ltd., "oil expenses rose more than 4% in early Asian transferring on Monday as Hamas attack on Israel under attack to inflame tensions in the Middle East, the source of about a third of the world's crude, with Iran reportedly supporting Hamas."

After prices dropped last week as traders booked profits, they have since increased. According to US Energy Information Administration (EIA) statistics, there has been a sharp decline in gasoline demand in the US. In the week ending September 29, gasoline stockpiles increased by 6.5 million barrels, compared to a growth of 1 million barrels the week before.

Despite Monday's gain, oil prices remain below the $90 per barrel threshold. Brent prices just surpassed the $97 per barrel barrier, the highest level since 2023, because to supply issues and ongoing production restrictions from OPEC and its allies.

India is quite concerned about the rise in crude oil prices since it might increase the cost of imports. 85% of India's energy needs are imported. The amount of crude oil and petroleum products imported by India in FY23 increased by 29.5% to $209.57 billion.

The average price of the Indian crude basket was $93.54 per barrel in September and $85.66 per barrel on October 6.