LIVE MARKETS-What do Israel's elections mean for oil prices?

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WHAT DO ISRAEL'S ELECTIONS MEAN FOR OIL PRICES?

Israel's election result matters for oil, because it could affect the chances of a wider conflict in the Middle East, according to BCA Research.

The vote failed to produce a clear winner, leaving coalition talks likely to drag on and creating uncertainty over future policy towards Iran. For now, Benjamin Netanyahu remains in office as caretaker.

BCA argues the political outcome could make some difference.

"Another Netanyahu-led government would raise the risk of Israeli escalation and a major oil supply shock, while an opposition victory would reduce, but not eliminate, this risk due to its greater coordination with, and deference to, the US," say strategists Jesse Kuri and Matt Gertken.

The firm's main view is still relatively constructive. It sees a 70% chance that tensions either stabilise or ease, helped by improving shipping conditions in the Strait of Hormuz and the possibility of renewed US-Iran talks. In that scenario, oil prices would likely remain around current levels.

Even so, BCA says investors should not ignore the risks. It estimates the chance of a larger conflict and a serious oil supply shock rises to 42% if Benjamin Netanyahu remains in power. That scenario could help push oil to $150 a barrel or higher, reviving concerns about inflation and global growth.

(Danilo Masoni)

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