The ongoing conflict between Israel and Hamas may result in additional U.S. sanctions on Iranian oil exports. Benjamin Salisbury, an expert at Height Capital Markets, suggests that both the Biden administration and Congress could impose stricter sanctions and strengthen enforcement measures targeting Iranian oil exports, with potential pressure on shipments to China.
According to a report by the Wall Street Journal, senior members of both Hamas and Hezbollah - another Iran-backed militant group - have revealed that Iranian security officials were involved in planning Hamas' surprise attack on Israel. Furthermore, Hamas itself has confirmed receiving support from its ally Iran for its recent attacks.
However, as reported by The Times of Israel, the Israel Defense Forces have stated that there is yet no evidence of Iran's involvement in these attacks.
To address the situation, the Biden administration has the option to take unilateral action, but Congress might also require separate measures. Senators Maggie Hassan, a Democrat from New Hampshire, and Marco Rubio, a Republican from Florida, have proposed the Stop Harboring Iranian Petroleum Act. This legislation aims to sanction entities involved in refining and shipping Iranian oil, including ship-to-ship transfers.
Notably, this conflict arises amidst the vacancy of the Speaker position in the House of Representatives. The recent removal of Representative Kevin McCarthy has left the House in a state of standstill until a new speaker is elected. The lack of a speaker could potentially hinder the approval of new aid to Israel.
Good for stocks? Read why Tom Lee believes the attack on Israel could benefit equities.
Middle East Tensions Could Impact House Speaker Election
House Foreign Affairs Committee Chairman Michael McCaul, a Texas Republican, expressed the urgent need to elect a speaker this week in order to address crucial matters such as replenishing the Iron Dome, Israel's air-defense system. The recent attacks on Israel have raised tensions in the Middle East and analysts at Raymond James believe that this situation could expedite the election of a new speaker.
Potential Resolution for Domestic Uncertainty
According to the analysts, the spike in Middle East tensions might help resolve the ongoing uncertainty surrounding the House speaker battle and also provide clarity on the way forward for new defense funding. Additionally, they mention that if the events over the weekend significantly increase pressure on the House to return to regular order and address spending battles amidst mounting foreign crises, it would alleviate concerns about dysfunction in Washington, benefiting defense equities ITA and easing general market concerns.
Upcoming Speaker Selection Process
House Republicans have scheduled a forum for speaker candidates on Tuesday at 5 p.m. Eastern, with an internal election for speaker planned for Wednesday morning. It is important to note that a formal vote for speaker will then need to take place on the House floor, requiring a majority of votes from the chamber.
Impact on Oil Prices
The surprise, deadly attack by Hamas on Israel over the weekend also has implications for crude supplies, leading to a rise in oil prices on Monday. Traders are carefully considering the potential effects of these developments.