Oil Rises as Qatar Strike Revives Geopolitical Risks

Leslie Palti-Guzman, founder at Energy Vista, discusses Israel's surprise attack in Qatar and its impact on the energy market.

Israel conducted an unprecedented strike against senior Hamas leaders in the Qatari capital of Doha, escalating an already tense standoff between the country and Arab nations over the war in Gaza.

The move against the Iran-backed group was “a wholly independent Israeli operation,” Prime Minister Benjamin Netanyahu’s office said in a statement on Tuesday, suggesting that chief ally the US had no direct involvement. “Israel initiated it, Israel conducted it, and Israel takes full responsibility.”

A White House official said Israel notified the US immediately before the attack took place.

Qatar condemned the strike on the nation’s capital, calling it a “flagrant violation” of international law, after several blasts were heard earlier in the city. Qatar “will not tolerate this reckless Israeli behavior and its continued tampering with regional security,” Foreign Ministry Spokesman Majed Al Ansari said in a post on X.

Hamas leaders, headed by Khalil Al-Hayya, survived the Israeli attack, Doha-based Al Jazeera reported, citing a senior Hamas source.

Israel has been fighting Hamas in Gaza since the militant group’s deadly attack on the country in October 2023. Qatar is one of the key mediators between Israel and the Palestinian group, designated a terrorist organization by the US and European Union, and has been central to on-off ceasefire talks between the two sides.

Israel has never previously attacked Qatar, and the strike is likely to further anger Arab nations already on edge about the Palestinian deathtoll in Gaza and the humanitarian impact of the war. Qatar is also an ally of the US, which has so far supported Israel’s military actions against Hamas and other Tehran-backed militant groups, as well as the airstrikes on Iran itself three months ago.

Qatar is home to Al-Udeid Air Base, the biggest US military installation in the Middle East.

Oil jumped after reports of the Israeli attack, which revived fears of a wider conflict in the Middle East. West Texas Intermediate climbed 1.8% to top $63 a barrel.

Oil is higher Tuesday morning as Israeli strikes on Hamas leadership in Qatar are reviving worries of a wider Middle East flare-up. The tension between this rising geopolitical risk premium and OPEC+’s recent agreement to revive more halted production has prices rangebound.

The Israeli strike on Hamas leadership in Doha drags Qatar, long a mediator, into the conflict. It’s also a reminder that Iran could come more directly back into the fray. For traders, that raises the specter of renewed tension around the Strait of Hormuz, the world’s most critical oil chokepoint.

OPEC+’s October add was smaller than feared and came with optionality to pause or reverse. Further, Saudi price cuts flag a market-share push, but not every member can lift output cleanly while Russia’s export levels remain harassed by Ukrainian strikes. The expected increase in barrels may overstate what’s actually hitting the market.

Turning to the demand side, prompt Brent and WTI spreads are at their softest since May, and a big option bet was placed that the Brent curve would move into contango. Yet product cracks tell a firmer story with distillates markets still tight, keeping a floor under margins even as crude balances loosen. That mix argues for continued solid spot demand, albeit less robust than seen over the summer.

--------

Watch Bloomberg Radio LIVE on YouTube

Weekdays 7am-6pm ET

Follow us on X

Subscribe to our Podcasts:

Bloomberg Daybreak

Bloomberg Surveillance

Bloomberg Intelligence

Balance of Power

Bloomberg Businessweek

Listen on Apple CarPlay and Android Auto with the Bloomberg Business app:

Apple CarPlay

Android Auto

Visit our YouTube channels:

Bloomberg Podcasts

Bloomberg Television

Bloomberg Originals