Since the Hamas attacks on Israeli citizens on October 7, the oil market has seemingly shrugged off escalation risks. Despite the brutal assault on Gaza that has killed an estimated 33,000 Palestinians, disruptions to shipping lanes due to frequent attacks on Red Sea vessels by Houthi militants, and low-level conflict between Israel and Hezbollah, the market response has been muted. This is largely because disruptions to physical supplies of crude oil and product products have not materialized. Instead, macroeconomic concerns have continued to drive sentiment in an oil market that has remained well supplied, with production cuts by the Organization of the Petroleum Exporting Countries and allied producers (OPEC+) last year offset by supply growth elsewhere.
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