Israeli raid kills Hezbollah leader Nasrallah: Impact on oil prices

Israeli armed forces announced on Saturday that a Friday air raid in Dahije killed Hezbollah leader Hasan Nasrallah, which the organisation later confirmed. This is another escalation in the Middle East. What does this escalation mean for oil prices?

Hasan Nasrallah had led the Lebanese Hezbollah since 1992, a Shia party and armed movement supported by Iran and considered a terrorist organisation. Under his leadership, Hezbollah has transformed into a significant regional force.

Closely connected to Iran, Nasrallah was for years one of the most recognisable and influential figures in the Middle East. Known for his charisma and oratory skills, the leader was revered by his followers, commented the BBC.

Iran's highest spiritual and political leader, Ayatollah Ali Khamenei, called on Saturday for Muslims to "stand shoulder to shoulder with the people of Lebanon and the proud Hezbollah and help them in any possible way to oppose the wicked regime" of Israel.

Hezbollah controls southern Lebanon and has fought Israel with varying intensity for decades. Since the outbreak of the war in Gaza, there has been regular exchange of fire on the Israeli-Lebanese border. In the past week, Israel started bombarding Lebanon intensely, and the conflict has significantly intensified. Hezbollah is considered a terrorist organisation by the West.

- Israel will not wait for Hezbollah's reaction but will do its own thing and use its initiative and advantage to achieve its goal. And that goal is to dismantle Hezbollah's military structures, emphasises Jarosław Kociszewski, a political scientist with the Stratpoints foundation and editor-in-chief of "New Eastern Europe" magazine, in an interview with PAP.

When asked about a potential ground offensive by Israeli armed forces, the analyst replies: - We don't know that, but it is known that the Israelis are ready for it, and in the case of such a decision, it would take a few hours. Although on the other hand, it is also known that it is easier to enter than to exit.

Hezbollah's reaction remains uncertain. - At this moment, it is not responding significantly and in an organised way. The shelling of Israel with 200-300 rockets is not a large number compared to previous assessments that Hezbollah is capable of firing several thousand missiles daily. This, however, is not happening – he notes.

On Saturday evening, the AFP agency, citing a source in the Lebanese security apparatus, reported that Israel attacked warehouses near the airport in Lebanon's capital, Beirut. The shelled area is an industrial zone with many car workshops, a Reuters source reported. It was noted that among previous Israeli attacks, this was the closest to Lebanon's only international airport.

Mohammad al-Hut, president of Lebanese airline Middle East Airlines, said the airport is operating normally. - Beirut airport is not the target of the attack; there are no weapons there - he assured in an interview with Reuters.

What does the current situation in the Middle East mean for oil prices? - Global markets are well-supplied. To significantly increase oil prices, regional supplies would need to be destroyed - comments Matt Gertken, chief strategist at BCA Research, a market advisory firm, in an interview with Barron's weekly service.

- At this stage, a serious market reaction would require either a severe supply shock in oil production or distribution, a significant spread of the war to major oil production areas, or a major military-political event that would lead to a larger conventional war, threatening oil supply - he adds.

The current price for a barrel of WTI oil is just over 68 dollars, and a barrel of Crude oil is just under 72 dollars.