Shares of energy companies experienced a significant drop amidst growing concerns that the profit boon enjoyed by integrated oil giants may be coming to an end. Despite posting an impressive $15.6 billion in aggregate profit, Exxon Mobil and Chevron saw their shares decline. Chevron, in particular, saw a decrease of over 6% due to worries about the future profitability of its drilling operations.
Escalation in Gaza Strip Conflicts Fails to Halt Decline in Oil Futures
In response to intensifying airstrikes in the Gaza Strip, the Israeli army announced on Friday night that it would be expanding its ground operations. This move aimed to bring an end to the 16-year rule of Hamas. However, despite this escalation in conflicts, oil futures continued their downward trend. One strategist believes that this signifies the potential for diplomatic maneuvering to yield positive results.
Market Containment Efforts Prove Effective, Preventing Surge in Oil Prices
Quincy Krosby, the chief global strategist at brokerage LPL Financial, highlights the efforts being made by the U.S., Western nations, and various Middle Eastern countries to contain the conflict. These attempts aim to prevent further escalation and maintain stability in the region. Krosby notes that the conflict has not spread beyond the current boundaries, with Israeli troops not marching deeper into surrounding areas. As a result, oil prices have only seen a gradual increase as opposed to a sudden surge prompted by supply disruption fears.
It is worth noting that if there were market expectations that the conflict would spread to other parts of the Middle East, oil prices would experience a significant surge rather than just a marginal increase.