Tel Aviv, Sunday – The Tel Aviv Oil and Gas Index experienced a significant setback today, with a staggering decline of approximately 9% in trading on the stock exchange. Earlier in the day, the declines even breached the 10% mark, highlighting the volatile nature of the energy sector in the current geopolitical landscape. This downturn comes as a stark contrast to the index’s stellar performance earlier in the year, when it posted impressive gains of 42%.
Until last week, the Tel Aviv Oil and Gas Index had been a standout performer in the stock market, capturing investors’ attention with its remarkable growth. The catalyst for this growth was the potential investment in the NewMed Energy partnership, which holds a stake in the lucrative Leviathan reservoir by the British Petroleum and the Abu Dhabi National Oil Company (ADNOC) as they had expressed interest in a joint investment worth NIS 14 billion for the partnership.
However, with the outbreak of the unexpected war yesterday morning and the ensuing uncertainty, investors are growing wary. The possibility of the investment deal, which was already on shaky ground, now appears even more precarious. The fear stemming from potential conflict with Hezbollah has cast an additional shadow of doubt over energy company stocks, as many of them derive a significant portion of their revenue from operating gas rigs in the Mediterranean Sea.
Among the prominent casualties of this market downturn are NewMed Energy, whose stock plummeted by approximately 13%, and Delek Group, whose shares witnessed a similar decline of 13%. The broader Tel Aviv Oil and Gas Index, comprising 14 stocks in total, also suffered a collective decline. This sudden turn of events has left investors and industry experts reevaluating their positions.
Adding to the mix is the decline in global oil prices, which slid from over $90 per barrel on October 3 to $82 per barrel last Friday. The combination of ongoing conflicts and the adverse effects on the energy market has resulted in sharp declines for the Tel Aviv Oil and Gas Index. As of the latest trading figures, the index hovers around 1,450 points, still reflecting an impressive year-to-date return.
Market analysts are closely monitoring the evolving geopolitical situation and its potential impacts on energy stocks. Investors are advised to exercise caution and stay attuned to developments in the region as they navigate this uncertain period in the oil and gas sector.