Shares of oil producers and other energy stocks traded generally higher early Monday after Middle East tension caused oil prices to rebound from recent lows.
The price of West Texas Intermediate futures bounced nearly 3% in early trade, trading around $77 a barrel. WTI had dipped below $72 a barrel on Wednesday. That marked its lowest level since early January, and down 11% from the year's high in April.
In a series of overnight strikes Sunday, Lebanon-based, Iran-backed military group Hezbollah launched what the Israeli Defense Forces said were about 200 rockets from Lebanon toward Israel. Hezbollah said it launched 320 rockets and a barrage of drones.
Israel said it had intercepted all of the drones launched. It reported one death.
The attack was in response to Israel's killing, in July, of top Hezbollah commander Fuad Shukr. The drone-based assassination took place in the southern suburbs of Beirut, a stronghold area for Hezbollah. Israel had killed Shukr in retaliation for an earlier attack in the Golan Heights that had killed 12 Israeli children.
Just ahead of Hezbollah's rocket firings, Israel had launched what it called a preemptive raid. That assault involved about 100 fighter jets, which the IDF said "struck and destroyed thousands of Hezbollah rocket launcher barrels," according to CNN reporting.
The IDF said its raid was based on intelligence showing that Hezbollah was about to launch an attack.
Attention Focuses On Iran
Following the rocket launchings, Hezbollah leader Hassan Nasrallah said his group was done retaliating for Shukr's death, the Wall Street Journal reported. That focused attention on Iran, where Israel had assassinated Ismail Haniyeh, the leader of the Palestine-base terrorist group Hamas, which had conducted the Oct. 7 raid against Israel.
The killing of Haniyeh had been carried out in Tehran, Iran's capital, on the same day as Shukr's elimination in Beirut. In response, Iran had pledged a "painful response" against Israel. In its prior retaliation against Israel, Iran had launched 170 drones and more than 30 cruise missiles.
It was a highly dramatic, but largely harmless effort in which Israel report 31 persons injured and minor damage to two air bases. In a broader view, that attack was highly successful in providing a show of strength to Iran's people, while effectively not escalating the military circumstances between Israel and Iran.
Jackson Hole Jolt: Fed Chair Powell Confirms September Rate Cut
Observers fear a widening of that conflict could lead to a much broader war in the Middle East. For the oil industry, direct military involvement between Israel and Iran could lead to U.S. or other sanctions against Iran, potentially removing Iranian oil from the global market. Direct conflict could also lead to damage of Iranian oil production facilities.
As of Monday, Israel and Hezbollah remain far apart on a possible resolution to cease fire talks underway in Cairo, Egypt. Emphatic diplomatic efforts from the Biden Administration and a four-day round of talks ended on Sunday.
The talks were constructive, and will continue in coming days, an unnamed source quoted by the New York Times said.
Oil Prices, Stocks; China Demand
Oil prices have remained almost shockingly low, in the midst of Middle East uncertainty that would normally send prices sharply higher. Even hurricanes threatening shutdowns of offshore production in the Gulf of Mexico have had little impact. Ongoing weak demand in China is a leading factor, accompanied by continued strong production in the U.S.
As a result, most oil-related stocks are working through consolidations.
Oil producers Marathon Oil and ConocoPhillips jumped 3.6% in early trade. Marathon is up 16% for the year and in a shallow base. EOG Resources and Devon Energy rallied 3.2% apiece.
As a group, the stocks in the U.S. explorers and producers oil group collectively rose 18% for the year to mid-April. The group currently is up 7% year to date.
Some solar industry stocks also ran higher Monday, although Israel-based SolarEdge dived more than 8%. Cheif executive Zvi Lando announced that he was unexpectedly stepping down. The company named an interim CEO, and launched a search for a new full-time candidate.
At the other end of the scale, First Solar popped 5% to lead the S&P 500 in morning trade. Enphase Energy rallied almost 3%.
