As Hezbollah confirms the death of its "leader" Nasrallah in an Israeli airstrike, the geopolitical tensions in the Middle East have inevitably escalated again this weekend.
However, for international oil prices, which have always been sensitive to the situation in the Middle East, are they really prepared for this now? Goldman Sachs, a well-known Wall Street firm, is undoubtedly quite concerned about this.
Goldman Sachs pointed out in a report released on Friday evening local time that the oil market currently lacks a war risk premium. Goldman Sachs analyst Lindsay Matcham said, "As tensions escalate between Hezbollah and Israel, we will continue to closely monitor the Middle East conflict
Matcham added, 'We believe that further escalation of the conflict could have a significant impact on the market, especially if it involves the potential closure of the Strait of Hormuz, which could lead to a surge in local oil prices.'.
According to media reports, on the evening of the 27th, the Israeli Defense Forces launched an airstrike on the headquarters of Hezbollah in Dashiyeh, southern Beirut, targeting Nasrallah, who has long been the leader of Hezbollah. The Israeli Air Force used advanced ground penetrating bombs aimed at destroying Hezbollah's command center located underground in residential buildings. Afterwards, the Israeli military announced on Saturday that it had killed the leader of the organization, Nasrallah, in a "precision strike" operation. Later that day, Hezbollah also confirmed the death of its "leader" Nasrallah.
Undoubtedly, the attack on Nasrallah is not the end of Israel's actions. According to Agence France Presse, the Israeli military said in a statement on the 28th that it carried out "large-scale strikes" on dozens of Hezbollah targets that day. Hezbollah claimed to have launched rocket attacks on northern Israel.
Based on the developments over the past week, Israeli attacks have resulted in over 700 deaths in Lebanon. The number of people who have fled their homes due to the conflict has now exceeded 250000.
The escalation of the situation has continuously intensified people's concerns about the possibility of the conflict getting out of control, thereby involving Iran, the main supporter of Hezbollah, and the United States.
Ferras Maksad, a senior researcher at the US think tank Middle East Institute, said on Saturday that the news of Nasrallah's killing would have "significant" regional consequences. Nasrallah is the most outstanding and iconic Arab leader of the 'Iranian Resistance Axis'. His killing symbolizes a direct confrontation between Israel and Iran over the future of Lebanon and the Levant. This is likely the beginning, not the end, of an impending conflict
From the recent trend of oil prices, compared to the continuous escalation of the geopolitical situation in the Middle East, the oil market's attention or response to this is clearly insufficient. This week, Brent crude oil futures fell by about 3%, and WTI crude oil futures in the United States fell by about 5%, due to media reports that Saudi Arabia has decided to abandon its $100 oil price target and instead increase production to seize more market share.
However, in another recently released report, Goldman Sachs analyst Lina Thomas highlighted four short-term positive drivers of the crude oil market, including the Middle East trend.
The easing of global monetary policy;
Crude oil inventory is still being consumed;
The position and valuation in the oil market are still relatively low;
The oil market has not yet taken into account the significant risks of geopolitical turbulence.
In fact, many industry insiders have stated that as speculators make record breaking bearish bets in the crude oil market, the threat of war risk leading to short selling in the oil market is indeed increasing.
US Defense Secretary Austin also pointed out on Friday local time that he was not informed in advance of Israel's attack on Hezbollah's central headquarters. He warned that a full-scale war between Israel and Hezbollah would have "devastating" consequences, with casualties "catching up to or surpassing" those in Gaza. He reiterated that the United States hopes to resolve the crisis through diplomatic means and stated that the Israeli military may launch a ground attack on Lebanon, which could escalate the situation into a regional conflict.