Financial Association News, October 8th (Editor Shi Zhengcheng) Due to the escalating fog around the Middle East conflict, international oil prices continued to rise on Monday. As of the time of publication, Brent crude oil rose over 3%, breaking above $80 per barrel for the first time since the end of August, while WTI crude oil also rose over 3%, with the latest quote exceeding $77 per barrel.

Saxo Bank's Head of Commodity Strategy, Ole Hansen, interprets in the latest report that market activity indicates an increased demand for further hedging against rising oil prices. Concerns behind this include the possibility of minor... or in the worst case, major supply disruptions.

Against the backdrop of the entire event, as the Israel-Hamas conflict in Gaza has been ongoing for a whole year, the outside world is closely watching the possibility of this war spreading - will Israel and Lebanon enter a full-scale war? How far will the reciprocal attacks between Israel and Iran go?

On the evening of October 1st local time, Iran launched a large-scale missile attack on Israel from its territory. The Israeli military stated that Iran had launched 'more than 180' ballistic missiles, with 'a few missiles' hitting central and southern Israel. After the missile strike, Iranian President Pezheshkiyan stated on social media that this action was a resolute response to Israel's 'aggression', and Iran does not seek war but will resist any threats.

Since then, with Israel continuously 'threatening retaliation' and the United States 'adding fuel to the fire,' international oil prices have been steadily rising. Especially last Thursday, after U.S. President Biden stated that the U.S. government is 'discussing' the possibility of supporting Israel's strikes on Iranian oil facilities, international oil prices soared over 4% in a single day. Despite Biden's subsequent change in tone on Friday suggesting that Israelis 'should consider options other than oil fields,' seeds of suspicion have already been sown.

As a result, both Brent and WTI crude oil saw cumulative increases of over 8% last week, the largest weekly gain since March 2023, according to statistics.

On just passed Monday, while various locations worldwide commemorated the one-year anniversary of the Gaza conflict, the conflict continued. According to multiple reports, the Israeli military intercepted rockets and missiles from Gaza and Yemen on Monday. Meanwhile, Israeli forces continued to launch air strikes on Beirut, the capital of Lebanon. Palestinian officials stated that in a dawn raid by the Israeli military on a refugee camp in the West Bank on Monday, a 12-year-old boy was shot and killed.

As a key decision-maker in Israel, Prime Minister Netanyahu submitted a proposal on Monday to rename the war that began on October 7, 2023, as the 'Resurrection War'. Currently, Israeli officials refer to the Gaza conflict as the 'Iron Sword War'. Netanyahu emphasized once again that the war will not end until all objectives are achieved.

There are significant differences in analysts' views.

There is currently a wide divergence in analysts' opinions on how the cycle of retaliation between Israel and Iran will impact the market.

For example, ANZ Research believes that any impact on international crude oil supply will not be significant. Currently, OPEC+ has sufficient spare oil production capacity to offset the effects of Israel cutting off Iran's supply. The variable in this assessment is whether Iran will include the oil facilities of neighboring Gulf countries in its retaliation, which could pose challenges for OPEC+.

Alan Gelder, Vice President of Petroleum Markets at Wood Mackenzie, stated on Monday that the market is currently only pricing in the possibility of an Israeli attack on Iran's oil facilities, but this is not the worst-case scenario. The worst-case scenario would be a disruption in the Strait of Hormuz, through which 20% of global crude oil exports pass, which would have a more severe impact on crude oil prices.

Helima Croft, Global Head of Commodity Strategy at RBC Capital Markets, also believes that further observation is needed on how Israel and Iran will react. If Israel attacks Kharg Island - through which 90% of Iran's crude oil exports pass - this will have a significant impact on the oil market.

It also has an impact on stock investors.

Considering that Chinese A-shares were on holiday for a week, the asset price changes over the past week will all be reflected in the market on Tuesday.

Affected by the rise in international oil prices, representing the weight of oil in the US stock market$Energy Select Sector SPDR Fund (XLE.US)$Rose 6.87% last week, and rose nearly 1% on Monday.

In the more China-oriented Hong Kong stock market,$PETROCHINA (00857.HK)$Rose 8.52% between October 2nd and 7th.$SINOPEC CORP (00386.HK)$Up 12.19%,$CNOOC (00883.HK)$Up 13.54%.

Editor/ping