Israel-Hamas War: On October 6, 1973, Arab countries together attacked Israel. US President Richard Nixon came out in defense of Israel. He announced an aid of Rs 18 thousand crores to Israel.
Angered by this decision of America, OPEC countries drastically cut oil production. The entire planning to teach America a lesson by reducing oil production was done under the leadership of Saudi King Faisal.
The result was that by 1974 there was a shortage of oil in the world. Oil prices went from $5 per barrel to $25 per barrel. That means oil prices increased 5 times. Its biggest impact was on America and its rich fellow countries. Due to economic recession there, inflation started touching the sky.
Exactly 50 years later, Israel has been attacked once again (Israel-Hamas War) in the month of October. In this story we will know whether due to Israel-Hamas war, the oil prices in the world will once again start touching the sky...
According to Bloomberg, the war between Israel and Hamas has just begun. In such a situation, it is difficult to tell exactly how much impact it will have on the oil market. However, many things will depend on the action of Israel and Iran.
1. This war is not like October 1973. Then the Arab countries united and attacked Israel. This time Egypt, Jordan, Syria, Saudi Arabia and other Arab countries have so far kept themselves away from this war. In such a situation, there is little possibility of a situation like 1973 happening again.
2. The situation in the current oil market is not like that of October 1973. At that time the demand for oil was increasing, but no country had that much oil in reserve. In today's time, due to electric vehicles, the demand for oil has decreased compared to then.
However, Saudi Arabia and the United Arab Emirates still have excess oil production capacity. Sometimes they also use it to control oil prices. Because of this war, these two countries do not seem to be taking any such major decisions at the moment.
3. Today, OPEC countries are not willing to increase the price of oil significantly. These countries agree to increase the price by just a few dollars. Instead of increasing oil prices by more than 100% to $ 200 per barrel, Saudi Arabia is currently in favor of keeping the price between $ 85 to $ 100 per barrel. At the same time, by reducing oil production in October 1973, OPEC countries increased petroleum prices by about 70%.
4. Israel-Hamas war may impact oil markets in 2023 and 2024. The biggest impact will be seen when Iran directly enters this war. In 2019, Yemen's Houthi rebels attacked Saudi oil production facilities. Iran's involvement was suggested in this.
This had an impact on the world's oil supply chain. Once again, if Israel somehow holds Iran responsible for the attack on itself, then it will again try to influence the market by attacking oil facilities through other organizations.
5. Despite US sanctions due to the Russia-Ukraine war, Iran supplied oil to the world. America deliberately did not pay attention to this so that the price of oil in the world does not increase much.
The result was that Iran's oil production increased by approximately 700,000 barrels per day. Now, if America once again bans buying and selling of Iranian oil, then the world oil price may reach $ 100 per barrel.
6. If there is an oil crisis in the Middle East due to the Israel-Hamas war, Russia will benefit from it. If America imposes sanctions against Iran, Russia will benefit from it.
Russia may once again try to earn profit by increasing the price of oil in the world in collaboration with OPEC+ countries. One reason why America is not taking action on Iranian oil exports is that it causes the most loss to Russia. It is clear that due to this war, the price of oil is sure to increase as soon as action is taken against Iran.
7. A big deal was going to be made between Saudi Arabia and Israel through America. It was believed that after this deal, Saudi Arabia was going to recognize Israel as a country. Even before this, Hamas attacked. Even though Saudi Arabia is angry with Hamas, the Saudi people are still inclined towards Palestine like in 1973. In such a situation, if Saudi takes any action due to domestic politics, it will have a direct impact on oil prices. Due to this, oil prices may even cross $100 per barrel.
8. A situation like 1973 will not arise because America has a lot of reserve oil. America will start pumping its reserve oil into the market. However, despite this, any decision taken by Iran may increase oil prices. One reason for this is that after the Russia-Ukraine war, America's oil reserves have reached its lowest level in 40 years, yet America has enough oil to deal with such a crisis.