Despite a recent surge in warfare in the Middle East, shares of energy companies experienced a slight dip, following the downward trend of oil futures.
In a recent tragedy, three U.S. service members lost their lives, with at least 34 others sustaining injuries in a drone strike on a base in northeast Jordan. Notably, this attack, backed by Iran, marks the first instance of American troops being killed in hostile action since the Hamas-Israeli conflict unfolded in Gaza.
Pledging a response to this act of aggression, the Biden administration is keen on addressing the issue. Surprisingly, oil futures fell for the first time in four sessions, indicating that investors may be downplaying the potential for further escalation.
“In a normal environment, one would assume that energy prices would be skyrocketing right now, given the numerous attacks on service members,” remarked J.D. Joyce, president of Houston financial advisory Joyce Wealth Management.
However, it is becoming increasingly unlikely that oil markets can continue to disregard the mounting tensions in the Middle East.
According to Warren Patterson, head commodities strategist at brokerage ING, the primary “upside risk for the oil market would arise if tensions in the Middle East spread and start impacting oil production or disrupting oil flows that cannot be redirected.” This sentiment was reported earlier.
On a different note, U.S. natural gas futures saw a sharp decline of 8.2%, reaching $2.49 per million British thermal units due to mild weather forecasts.