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🇵🇸 Middle Eastern Officials Warn of Potential Oil Supply Disruptions Amid Israel-Hamas Conflict

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Cairo, Egypt – Iraqi Prime Minister Mohammed Shia al-Sudani has issued a warning that the ongoing conflict between Israel and Hamas could have dire consequences for the global oil supply if it escalates further and draws in other regional players. Speaking at a peace summit in Cairo, al-Sudani emphasized the potential impact on global security, the regional stability, energy supply chains, economic crises, and the risk of further conflicts.

Calls for Immediate Cease-Fire and Prisoner Swap

In his address, Prime Minister al-Sudani called for an immediate cease-fire and a prisoner exchange to bring an end to the ongoing violence. He urged all parties to exercise restraint and emphasized that evacuating civilians from the Gaza Strip amid Israeli airstrikes was not a viable solution, saying, “the Palestinians have no other place but their land.”

Critique of Settlement Policies

Prime Minister al-Sudani also suggested that the current crisis might have been averted if UN Security Council resolutions against Israel’s settlement policies in Palestinian territory had been respected. It’s worth noting that Israel dismantled its settlements in the Gaza Strip in 2005, and since 2006, Hamas has been in control of Gaza without new elections taking place in the territory since then.

Concerns Over Potential Oil Embargo

Al-Sudani’s warning comes amid growing concerns that Middle Eastern countries could consider cutting off oil exports to Western nations in response to a possible Israeli ground offensive in Gaza. Iranian Foreign Minister Hossein Amir-Abdollahian added to these concerns by calling on Muslim countries to impose an “immediate and complete” oil embargo on Israel. Such a move could have a significant impact on global energy markets.

Historical Context: The 1973 Arab Oil Embargo

Historical precedents underscore the potential consequences of such an oil embargo. The 1973 Arab oil embargo, in response to countries supporting Israel, led to long lines at gasoline pumps and had a severe economic impact. However, it’s important to note that the landscape of global oil supply has changed significantly since then. In 2022, only about 12% of the United States’ crude imports came from the Middle East, down from approximately 85% in the 1970s.

Global Economic Implications

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Despite this reduced reliance on Middle Eastern oil, international oil markets remain highly volatile. The Israel-Hamas conflict has already contributed to an increase in oil prices, which could exacerbate inflationary pressures. Fatih Birol, Executive Director of the International Energy Agency, warned that developing countries, especially those heavily reliant on imported crude and oil products, would be the most affected by rising oil prices.

Impact on Oil Prices

As of the latest reports, Brent crude, a key international oil benchmark, is trading at around $93 per barrel, up from $85 before Hamas militants killed hundreds of Israeli civilians and took hundreds more as hostages on October 7.

Potential Disruption by Iran

Hamas receives backing from Iran, which ranks as the world’s eighth-largest oil producer. Even without the support of other major oil exporters for an embargo, Tehran possesses the potential to significantly disrupt global energy markets. Approximately one-third of the world’s seaborne oil shipments pass through the strategically vital Strait of Hormuz, connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea.

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