Despite the killing of the Hezbollah leader, oil markets are not pricing in an 'all-out war,' but risks remain.

• Despite Hezbollah's confirmation that its leader was killed in an Israeli airstrike in Beirut on Friday, oil prices did not experience a significant reaction.
• Brent and West Texas Intermediate futures both experienced gains, with Brent increasing by 1.56% and West Texas Intermediate rising by 1.09%.

Despite Hezbollah's confirmation that its leader was killed in an Israeli airstrike in Beirut on Friday, oil prices remained unchanged on Monday.

On Friday, Israel Defense Forces announced that Hassan Nasrallah, the leader of the Iran-backed militant group Hezbollah for over thirty years, was killed in a "targeted strike" on the group's headquarters in Beirut.

According to the U.S. Director of National Intelligence and the London Assembly, Hezbollah, which is classified as a terrorist organization by several countries including the U.S. and the UK, is known for its violent opposition to Israel and its resistance to Western influence in the Middle East.

The conflict had been ongoing for several months and had raised concerns of a broader conflict involving Iran. The IDF identified Nasrallah as the group's "central decision-maker" and "strategic leader."

While Brent and WTI futures saw slight gains, oil markets did not experience a significant surge.

Despite the escalation of hostilities in the Middle East, there has been no disruption in oil supply, according to Andy Lipow, president of Lipow Oil Associates.

According to him, the oil market does not anticipate a full-scale war between Iran and Israel that would affect supply, as he stated via email to CNBC.

The Hamas-Israel conflict has had minimal disruption on the oil market, but the market remains under pressure due to increased production from the U.S., Canada, and Guyana, as well as stalling Chinese demand and OPEC+'s delayed restoration of production cuts, according to Lipow.

According to Josh Young, CIO at Bison Interests, the removal of Hezbollah leadership may cause a reaction that could lead to an impact on oil supplies, but since it did not have a direct effect on the oil market, it is unlikely to result in a significant increase in risk pricing for now.

Experts warned that a quick increase in conflict could cause crude oil prices to reach $100 per barrel.

If the Straits of Hormuz were to close, the oil market would face a significant risk, according to Lipow. Although it is unlikely, oil prices could increase by $30 per barrel if this happened, he stated.

Any disruption to Iranian oil supplies or oil exports through the Strait of Hormuz could cause oil prices to rise above $100 per barrel, according to Young.

The strait, situated between Oman and Iran, is a crucial waterway that facilitates the daily flow of approximately one-fifth of global oil production, as per the U.S. Energy Information Administration. This strategically important waterway connects crude producers in the Middle East with major markets worldwide.

Over 10,000 people from both sides of the Israel-Lebanon border have been displaced due to the ongoing cross-border fires that began after Hamas launched an attack on Israel on October 7th. Hezbollah has been supporting Hamas in this conflict.