Black swan raid, panic trading again? International oil prices have plummeted, and the Israeli stock market has "collapsed"! How big is the impact?

Stimulated by the tension in the Middle East, international oil prices rose sharply. As of press time, WTI crude oil futures rose as high as more than 5% during the day and are now at $86.15 per barrel. Brent crude also rose more than 5% during the day to $87.74 a barrel.

However, due to the sharp drop in international oil prices during the long holiday, domestic crude oil varieties opened sharply lower in early trading, SC crude oil and fuel oil fell by more than 7%, and low-sulfur fuel oil (LU) fell by more than 6%.

In addition to crude oil, gold has also risen to a certain extent in the international market. London gold rose more than 1% at one point to $1850.375 an ounce, while COMEX gold rose as much as 1.32% to $1869.5 an ounce and rose 1% to $1863.7 an ounce at press time.

At the same time, U.S. stock index futures went all the way down. At press time, Dow futures were down 0.61%, while S&P 500 futures and Nasdaq 100 futures were both down more than 0.7%.

The Israeli stock market, which closed the day before, fell nearly 7 percent.

Military conflict breaks out in the Middle East

The casualties on both sides exceeded 5,600

According to CCTV reports, on October 7, local time, more than 20 Palestinian armed men entered Israel and clashed with the Israeli army. The Palestinian Islamic Resistance Movement (Hamas) issued a statement announcing a new round of military action against Israel. At about 7 a.m. local time, Hamas began firing rockets intensively into Israel, and its armed men entered Israel under the cover of rockets to carry out military operations. Hamas said it had fired at least 5,000 rockets into Israel.

Israeli air strikes followed in the Gaza Strip. Israeli Prime Minister Benjamin Netanyahu declared the country a "state of war."

Image source: CCTV news screenshot

According to Xinhua News Agency, the new round of Palestinian-Israeli conflict has killed more than 700 Israelis. Palestinian health authorities in the Gaza Strip issued a statement that night saying that Israeli forces had killed at least 413 people and injured 2,300 in their attacks on the Gaza Strip. Statistics released by Israeli medical authorities that night showed that more than 2,200 Israelis had been injured in the clashes. The Israeli government press office said on social media that day that more than 100 hostages were taken into the Gaza Strip.

According to the Global Times, Israeli Prime Minister Netanyahu claimed on the 8th that he would "raze the area controlled by Hamas" to the ground, but he also admitted that he faces a "long and difficult war" in the future.

The world has been shocked by the sharp escalation of the Palestinian-Israeli conflict, and people are even more worried about whether the conflict will expand further in the future. In this regard, the United States and other Western countries unilaterally accused Hamas, claiming that Israel "has the right to defend itself" and announced that it would provide billions of dollars in weapons assistance to Israel. Most countries called for an immediate ceasefire between the two sides, citing the conflict as the result of a long period of non-compliance with relevant UN Security Council resolutions. A spokesman for the Chinese Foreign Ministry said on the 8th that the fundamental way to calm the Palestinian-Israeli conflict lies in implementing the "two-state solution" and establishing an independent Palestinian state.

How do international oil prices affect?

Because the conflict was on the doorstep of the world's major oil-producing and exporting regions, the Fourth Middle East War, which broke out in 1973, led to global inflation. Therefore, the market is also more concerned about the impact on the crude oil market.

While crude oil prices are currently surging, analysts see this as a short-term shock and likely to be temporary.

Vivek Dhar, director of mining and energy commodity research at Commonwealth Bank, said. In his view, the conflict did not directly put any major source of oil supply at risk. Neither side is a major oil player. Israel has two refineries with a combined capacity of nearly 3 million barrels per day, but the country has "almost no crude oil and condensate production." Similarly, the Palestinian territories do not produce oil, according to the U.S. Energy Information Administration.

Saudi Energy Minister Abdulaziz bin Salman said in a public speech on Sunday that the Saudi-Russian coalition of oil producers was prepared precautionarily, waiting months for "true numbers" guidance before adjusting policy amid volatile crude market prices.

Asked if OPEC+ has a response to the latest escalation of the Israeli-Hamas conflict, the energy minister stressed, "We have dealt with the low point of global challenges, including the coronavirus." I believe the best thing I can say is that the cohesion of OPEC+ should not be challenged. We've been through the worst-case scenario, and I don't think we need to worry about anything scary at all. “

What do Chinese institutions think?

For future oil prices, Zhong Meiyan, an analyst at Everbright Futures, said that marginal support from Saudi Arabia leading production cuts has weakened, with Saudi Arabia saying it is willing to increase oil production to promote an agreement with Israel after negotiations between the United States and Saudi Arabia on a potential large security agreement. At the same time, on 7 and 8 October, the Palestinian-Israeli conflict intensified again, and Israel declared a state of war. In the short term, geopolitical conflicts in the fourth quarter will re-introduce supply vulnerabilities, although the specific situation cannot be effectively assessed at this time. It is expected that in the fourth quarter, crude oil will show a range-bound trend of falling price center of gravity, of which WTI crude oil is expected to be 65-85 US dollars / barrel, and crude oil is expected to be 70-90 US dollars / barrel. At the same time, it is necessary to pay attention to the geopolitical premium brought by the trend of geopolitical conflicts on oil prices, and the impact of macroeconomic trends on demand.

Melya Futures said that on the whole, oil prices fell by more than $10 during the holiday, releasing certain risks in the short term, interest rate hike concerns, the bearishness of oil producers who may increase production in the future, the increase in inventory, and the weakening of gasoline demand put pressure on oil prices at a high level, and the market is worried that the Fed will need to maintain higher interest rates for a longer period of time to curb inflation. It is expected that after the holiday, geopolitical events brought about by the Palestinian-Israeli conflict or short-term slowdown the risk of oil prices continuing to fall, in the short term in the context of oil-producing countries not suspending production cuts, the supply and demand pattern is relatively stable, more need to be vigilant against the pressure brought by the macro level. On the first trading day after the holiday, it is expected that the domestic SC will fall by about 6%-8%, and the early put will gradually profit out of the market, waiting for further drive.

Guoxin Futures said that during the National Day holiday, international oil prices fell sharply. But active oil and gas rigs in the U.S. continue to decline. Data released by Baker Hughes, GE's oilfield services agency, showed that the number of wells drilled online in the United States was 497 in the week ended Oct. 6, the lowest level since February 2022 and five fewer than the previous week; This is 105 fewer than in the same period last year. Saudi Arabia and Russia's additional voluntary crude oil supply reduction policy has been extended until the end of this year, and global crude oil supply is still tight. Israel declared a state of war and watched to see if the Palestinian-Israeli conflict would escalate further. Pay attention to the support of U.S. WTI crude oil around $80 / barrel, oil prices may be expected to stabilize and rebound after the holiday, and it is recommended to operate with more ideas.

SDIC Anxin Futures said that the international oil price fell sharply during the holiday, mainly dragged down by multiple factors such as the rise in US bond yields and the US dollar, the expectation of easing relations between the United States and Saudi Arabia, and the weakening of the EIA single-week gasoline meter, and the negative feedback at the macro and micro levels under high oil prices has been realized. The Palestinian-Israeli conflict escalated over the weekend, Palestine and Israel are not major oil producers, and the direct impact of the conflict on supply and demand is relatively limited, but the market will reassess the geopolitical premium, mainly reflected in the possible tightening of US sanctions on Iran and the increase in uncertainty about the easing of relations between the United States and Saudi Arabia, oil prices ushered in short-term support, and subsequent statements and developments may dominate oil price fluctuations this week, it is recommended to wait and see.

Responsible editor: Wang Shidan | Reviewed: Li Zhen | Supervisor: Wan Junwei

(Source: Securities Times)