How oil shocks can be less shocking

Oil price shocks have an asymmetric and non-linear effect.

IT has been over seven months since the Israel-Hamas War erupted on Oct 7, 2023. Prices of Brent crude, the international benchmark, have broadly stayed range-bound though it has hit a high of US$92.16 for a barrel of crude oil (bbl) on Oct 16, 2023 and US$90.48 per bbl on April 5, 2024.

When Iran strike Israel on April 13 and was retaliated by Israel on April 19, the subdued reaction of crude oil prices to the historic attack stemmed from investors pricing in the risk prior to the event. This reflects a larger trend of market quietness since the start of the Israel-Hamas war.