Middle East Conflict and Its Effect on Crude Oil Price and Global Industry

Global oil prices have risen since violence broke out between Israel and Hamas, on concerns over how the crisis may influence Middle Eastern energy supply.

Brent Crude gained 4.2 percent to $88.15 per barrel on Monday, while West Texas Intermediate gained 4.3 percent to $86.38 per barrel.

Following a big jump on Monday due to Middle East concerns. The price has held around the $85 mark, almost 4% higher than the end of last week, Despite some profit-taking and occasional selling, 

In contrast to gasoline, which has recently seen its prices fall amid fears that higher prices will dampen demand, commodities that are expected to see an increase in demand due to expensive crude are commanding high prices.

The closing price for New York raw sugar futures on Tuesday was 27.05 cents per pound, an increase of 18% from the end of June. On September 19, the price reached a high of 27.62 cents, the highest in about 12 years. On Wednesday, prices briefly fell to 26.58 cents.

Since July, when Saudi Arabia and Russia announced the extension of oil production cuts, sugar prices have risen in lockstep with crude oil.

According to the US Commodity Futures Trading Commission, the noncommercial sector, which includes investment funds, held 239,240 raw sugar futures contracts as of Sept. 26, a 9% increase from the end of June.

Sugar prices are rising due to speculation that rising crude oil prices will raise fuel prices and increase demand for ethanol, a relatively inexpensive biofuel.

Sugar cane is used to produce both ethanol, which is mixed into gasoline for automobiles, and raw sugar. Commodity traders are concerned that raw sugar production may decline if sugar-cane producing countries divert a large portion of their product for bioethanol fuel.

Reference : 

Hamano, W. (2023, October 4). Next-gen battery tech taps cosmetics ingredient. Nikkei Asia. https://asia.nikkei.com/Business/Technology/Next-gen-battery-tech-taps-cosmetics-ingredient