Oil Prices Remain Steady After Hezbollah Leader's Death, Israel Informs US Of Potential Ground Incursion Into Lebanon

Israel has told the U.S. it is considering putting troops on the ground in Lebanon.

The decision, reported by the Washington Post, which cited an unnamed U.S. official, comes as Israeli forces carry out air raids in Lebanon and Prime Minister Benjamin Netanyahu rejects international calls for a cease-fire.

Here’s a breakdown of the latest developments coming from the region:

Market Impact

Oil prices showed little reaction on Monday following the death of Hezbollah leader Hassan Nasrallah in an Israeli airstrike in Beirut.

Brent crude currently hovers between $73 and $74 per barrel, while U.S. West Texas Intermediate increased by 0.23% to $68.34 at last check Monday.

Observers noted that oil supply disruptions have been minimal since fighting between Israel and Hezbollah resumed in October 2023 in the weeks following Hamas’ attack on an Israeli musical festival.

The U.S. considers both Hezbollah and Hamas to be terrorist organizations.

Increased production from the U.S., Canada, and Guyana, combined with weak Chinese demand, is keeping the market stable.

Reports indicate that oil prices could spike to $100 per barrel if the Strait of Hormuz—a vital route responsible for transporting about 20% of global oil — were to be affected.

ETFs To Watch: Despite heightened tensions, the market seems to be pricing in stability for now, barring any significant disruptions. United States Oil Fund USO was down 0.38% at last check Monday due to rising tensions.

U.S. defense stocks, tracked by the iShares U.S. Aerospace & Defense ETF ITA, are up 18.08% year-to-date.

Specific defense stocks did not gain as of Monday’s midday trading:

• Lockheed Martin LMT, down 0.4% to $580.
• The Boeing Company BA, down 2.38% to $152.60.
• Northrop Grumman Corporation NOC, down 0.75% to $522.84.

See Also: Lebanon's Foreign Minister Says US Is The Only Country That Can ‘Really Make A Difference In The Middle East'

Targeted Raids

Israel has been conducting targeted raids into southern Lebanon as part of efforts to push Hezbollah away from its northern border. These operations, described as intelligence-gathering and probing missions, come ahead of a potential broader ground incursion.

Hezbollah deputy leader Naim Qassem asserted that the group is prepared for a prolonged conflict if Israeli troops enter by land, per the Times of Israel.

Lebanon's Prime Minister Najib Mikati does not share the same sentiment and continues to call for a ceasefire.

What’s Next

On Monday, Reuters reported that the Lebanese government is looking to end Hezbollah’s armed presence south of the Litani River by invoking UN Security Council Resolution 1701.

UNSC Resolution 1701 was adopted unanimously back in August 2006, ending the previous war between Hezbollah and Israel.

The effectiveness of the resolution today depends on the political and military context, and the cooperation of the involved parties, particularly Israel, Hezbollah, and the international community.

It called for a cessation of hostilities and outlined a framework for a lasting peace between the parties involved.

Mikati is looking to elect a new president once a ceasefire occurs, ending a nearly two-year vacancy at the top post.

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