Oil prices surged by 4% as the Israel-Hamas conflict entered its third day following a surprise attack on Israel by Palestinian militants Hamas.

The global benchmark Brent increased by 4.07% to reach $88.02 per barrel on Monday, while the U.S. West Texas Intermediate futures rose by 4.25% to $86.31 per barrel.

During a major Jewish holiday at dawn on Saturday, Hamas launched a multi-pronged infiltration into Israel using various means. This attack came after thousands of rockets were fired from Gaza into Israel.

As of now, NBC News reports that at least 700 Israelis have been killed, while the Palestinian Health Ministry has recorded 313 deaths.

While the surge in crude prices is notable, analysts believe it may be a temporary knee-jerk reaction.

“For this conflict to have a lasting and meaningful impact on oil markets, there must be a sustained reduction in oil supply or transport,” stated Vivek Dhar, Commonwealth Bank’s director of mining and energy commodities research.

He further added, “Otherwise, and as history has shown, the positive oil price reaction tends to be temporary and easily trumped by other market forces.” Dhar also emphasized that no major oil supply sources are directly endangered by the conflict.

Neither Israel nor Palestine plays a significant role in the global oil industry. Israel has two refineries with a total capacity of nearly 300,000 barrels per day but produces no crude oil or condensate.

Similarly, the Palestinian territories do not produce any oil, according to data from the U.S. Energy Information Administration (EIA).

Nevertheless, the conflict’s proximity to a crucial oil-producing and exporting region concerns global consumers.

Of particular worry is Iran’s potential involvement in the conflict and its impact on oil supply.

“If western countries officially link Iranian intelligence to the Hamas attack, then Iran’s oil supply and exports face imminent downside risks,” warned Vivek Dhar.

Oil exports from Iran have already been limited since former U.S. President Donald Trump’s withdrawal from the nuclear accord in 2018 and the subsequent re-imposition of sanctions.

Citi highlighted that under encouragement from the U.S. and secret nuclear talks, Iran’s oil exports and production saw substantial growth from the end of 2022 to mid-2023.

There is also the concern that the conflict could spread throughout the region.

“If Iran becomes involved, there could be additional supply issues, although we have not reached that stage yet,” stated Henning Gloystein, Eurasia Group’s Director of Energy, Climate, and Resources in an email to AsumeTech.

Over the weekend, the Lebanese militant group Hezbollah launched attacks on three sites in the Shebaa Farms, located at the intersection of the Lebanese-Syrian border and the Israeli-occupied Golan Heights.

Gloystein clarified that these events over the weekend do not currently have an immediate impact on oil supply.