Oil prices slip even as Middle East tensions spike, as investors eye Fed meeting

Oil prices dipped after Israel sent ground forces into the Gaza Strip, opting for a cautious approach rather than a full-scale invasion.

Oil prices slip even as Middle East tensions spike, as investors eye Fed meeting

Investors closely monitored the U.S. Federal Reserve meeting on monetary policy later this week.

Analysts say that the markets are likely to increase their war-risk premiums this week, given recent developments.

Investors closely watch the U.S. Federal Reserve meeting on monetary policy later this week.

Global benchmark Brent

The price of oil fell by 1.06% to $89.52 a barrel. The U.S.

West Texas Intermediate

Futures prices last fell 1.16%, to $84.55 per barrel.

Bob McNally told CNBC by email that the market already priced the incursion in on Friday. "Tonight is more about'sell the facts'." Bob McNally, President of Rapidan Energy Group. He noted that the operations on the ground were "limited" so far and also mentioned other macroeconomic concerns.

The Fed is expected

Leave rates the same

On Wednesday, at the conclusion of the two-day meeting, the

U.S. economic growth was faster than expected, at 4.9% per annum.

Third quarter.

Israeli Prime Minister

Benjamin Netanyahu

On a Saturday

Press Conference

Israel is now in its second phase, which he believes will be "long and hard" as Israel expands its operations on the ground in the Gaza Strip.

Brent crude oil prices surged on Friday night, rising above $90 a barrel.

The military said it was 'increasing ground operations' in Gaza to eliminate the militant group Hamas

.

McNally said that "while a major disruption of oil supply is not our base scenario, the oil markets last week were a bit complacent regarding the likelihood of an Israeli ground invasion in Gaza and the risk for a larger regional war."

Recent developments are likely to increase the war-risk premium on the markets.

McNally predicts that the crude oil price may rise this week as a result of a higher risk premium. ANZ made similar predictions.

ANZ published a note in its daily on Monday that said: "The escalation raises the risks around supply disruptions which have been hanging over market since Hamas’s attack."

The bank said that while U.S. crude oil futures have only risen 3.3% since Hamas attacked on Oct. 7, there is a possibility of a wider conflict developing. This keeps the markets on edge.

Although Israel and the Palestinian Territories are not major oil producers, the conflict is located in an area that produces a lot of oil, which raises concerns about the war spreading beyond Gaza. Jake Sullivan, the U.S. National Security Adviser, spoke on Sunday.

The U.S. has said that it sees "an elevated risk"

The conflict spreading to other regions in the Middle East.

Worries about Iran's involvement are particularly prevalent

The horizon has been on the horizon

.

Iran is the world's largest oil producer, and Hamas is its main supporter.

Israel's military accuses Iran of ordering attacks on militia groups

It supports Hamas in Yemen, Iraq, and Lebanon by supplying Hamas intelligence and running an online campaign to boost anti-Israel sentiment.

Bank of America

Last week's warning

Any retaliation by Tehran against the United States could put at risk the passage of ships through the Strait of Hormuz. This is a channel that is considered vital.

The world's largest oil transit chokepoint

The bank stated in a note that if the Strait was closed, oil could spike to more than $250 per barrel.