Six months after Hamas brutally attacked Israel, Israeli forces announced they would remove the majority of the troops in southern Gaza, sparking a slight drop in oil prices. Only one brigade will remain in the area, leaving a minimal Israeli presence as the conflict continues.
Brent fell below $90 per barrel while crude slipped to less than $86 following Israel’s announcement, potentially indicating a much-needed reprieve from the souring prices at the pump for most Americans. While some experts remain skeptical of a turnaround, the hope of a reprieve from exorbitant gas prices would be much welcomed.
A Sign of Hope
The Israeli government made the extraordinary announcement that it would be removing a significant amount of troops from its operation in southern Gaza. Six months after the brutal attack of October 7th, which triggered the Israeli-Hamas conflict, the world remains shocked by the devastation the conflict has brought. As Israeli troops depart Southern Gaza, many are seeing this as a sign of hope that a peaceful end is possible between the two Middle Eastern forces.
The announcement comes mere days after President Biden told Israeli Prime Minister Benjamin Netanyahu that the US policy would hinge on Israel’s immediate action to address civilian and humanitarian suffering. At the same time, it may seem like a glimmer of hope for a resolution, but rising tension with Iran may shed some different light on Israel’s decision to diminish troops in southern Gaza.
The Threat of Conflict with Iran
While some are viewing Israel’s move as a potentially hopeful indication, tensions continue to rise between Israel and Iran. A high-ranking Iranian military authority warned Israel that Israeli embassies could be targeted. Iranian officials claim an attack would be in retaliation for the missile strike against the Iranian Consulate in Damascus.
Naturally, Israel retorted that their military would be ready to respond to any action Iran takes against their embassies. Tensions between the two Middle Eastern nations skyrocketed within the past few months alone.
Following Israel’s withdrawal, Brent futures slid below $90 a barrel at the end of the first week of April. Meanwhile, West Texas Intermediate dropped under $86 per barrel, a slight dip compared to the rally of the past several months. While a slight drop in oil prices could provide a much-needed reprieve for gas prices in general, experts question whether the slight downturn is indicative of a trend or a minor divot in an overall bullish market.
Not an Indication of a Turnaround
While the oil rally took a hiatus for a brief period of time, the geopolitical tensions in the Middle East and the ongoing Russian-Ukrainian conflict, many are skeptical of a dip in crude costs as an indicator of a turnaround.
With a threat of conflict looming between Israel and Iran, the potential for drastic crude and Brent gains is on the horizon. Following Israel’s withdrawal, US crude and Brent gained more than 4% as tensions increased in the Middle East. An additional regional conflict in the area could potentially disrupt crude supplies, threatening an already fragile supply line.
Other factors, including OPEC’s strict export limitations and globally tight supply, seem to indicate a continued surge in oil futures. The United States, in particular, is potentially on the up as we enter peak oil season when many Americans take to the road for summer vacations and road trips.
Are Americans Stuck with High Prices While Biden Is in Office?
Throughout his presidency, Joe Biden has made his disapproval of oil and fossil fuel usage abundantly clear. Even with controversial decisions, such as the recent liquid natural gas restrictions, President Biden continues to make oil prospects difficult, contributing to increased pressure on prices at the pump.
Until the Biden Administration alters its direction and gives Americans a break at the pump, the cost of a summer adventure may prove too much for American citizens. As the president seeks re-election, ultra-high gas prices could prove to be a political headache, claims Will Kennedy of Bloomberg News.
As the geopolitical conflicts continue, crude supply could remain tight, driving up the cost for Americans. This light reprieve following Israel’s withdrawal from Southern Gaza could only be a minor calm before a major storm.
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About the author: Tyler Reed began his career in the world of finance managing
a portfolio of municipal bonds at the Bank of New York Mellon. Four years later, he led the Marketing and Business Development team at a high-profile civil engineering firm. He had a focus on energy development in federal, state, and local pursuits. He picked up an Executive MBA from the University of Florida along the way. Following an entrepreneurial spirit, he founded a content writing agency. There, they service marketing agencies, PR firms, and enterprise accounts on a global scale. A sought-after television personality and featured writer in too many leading publications to list, his penchant for research delivers crisp and intelligent prose his audience continually craves.
