Oil prices were climbing sharply on Monday in reaction to the attack on Israel by Hamas. Energy stocks rose as traders watched how the conflict is set to affect oil production and transportation in the Middle East.
Brent crude, the global standard, rose 4.2% to $88.13 a barrel in early trading. West Texas Intermediate, the U.S. standard, climbed 4.7% to $86.56. However, prices still remain below levels of more than $90 a barrel reached last week.
The recent drop in prices was largely driven by concerns over demand as rising bond yields sparked concerns over economic growth. However, the surprise attack by Hamas on Israel launched on Saturday will likely focus attention on potential disruption to oil supplies.
U.S.-listed energy stocks were set for a positive open. Among producers, Exxon Mobil (ticker: XOM) was up 3.9% in early trading, Chevron (CVX) was up 3.0%, ConocoPhillips (COP) gained 4.4%, Occidental Petroleum (OXY) was up 4.2% and Marathon Oil (MRO) rose 5.2%.
Oil-services providers also rose with Halliburton (HAL) up 6.1% and SLB (SLB) –formerly Schlumberger– up 4.3%.
While neither Israel nor Palestine are major oil producers, attention will be on the reactions from Saudi Arabia and Iran –both members of the Organization of the Petroleum Exporting Countries, or OPEC– amid fears of an escalation of the conflict. Saudi Arabia had previously signaled it would be willing to boost oil production amid negotiations over a possible Saudi recognition of Israel in return for U.S. weapons sales and security guarantees, according to The Wall Street Journal.
