IMF Foresees Disruption In Oil Production Amid Israel-Hamas War

The escalation of the Israel-Hamas war may result in a disruption in crude oil production and transportation, according to the International Monetary Fund.

Pierre Olivier Gourinchas, IMF’s Director, Research Department said this at the October 2023 World Economic Outlook press briefing.

On Saturday, Israel woke up to a massive assault by Palestinian Islamist group Hamas as they were wrapping up the seven-day-long Jewish festival of Sukkot.

Thousands of missiles fired from Gaza rained down on indiscriminate targets in Israel leading to death and lots of injuries.

The attack was the worst breach in Israel’s defences since Arab armies waged war in 1973.

As of Tuesday, the death toll in Israel was over 900 with another 2,500 people injured in Israel. At least 11 American citizens were among the dead.

In Gaza, the number of Palestinians killed in Israeli military action has reached at least 830, while the Palestinian health ministry said over 4,250 have been wounded since Israel began to retaliate.

Experts predict that the development would affect crude oil prices and supply if the crisis is not de-escalated.

The IMF said so far, it cannot estimate the impact on the global economy.

Gourinchas said, “We are monitoring closely the situation. One of the things that we have observed already is that oil prices have increased somewhat over the last few days, by about 4 percent. And of course, this is something that we see often in situations where there is geopolitical instability in the region.

“We see spikes in energy prices and oil prices. We’ve seen that in previous crises and previous conflicts. And, of course, this reflects the potential risk that there could be a disruption either in the production or transport of oil in the region.”

Already, crude oil prices have jumped from $82 per barrel on October 6, 2023 to $89 following the conflict.