Oil prices jumped more than three dollars a barrel in early Asian trading, Monday, as political uncertainty worsened across the Middle East, following the outbreak of violent clashes between Israeli forces and Hamas over the weekend.
By 2320 GMT, Brent crude rose $3.34, or 3.95 percent, to $87.92 per barrel, while US West Texas Intermediate crude recorded $86.23 per barrel, up $3.44, or 4.16 percent.
On Saturday, Hamas launched the largest military attack on Israel in decades, killing hundreds of Israelis. In response, Israel carried out a wave of retaliatory air strikes on Gaza, killing hundreds.
The outbreak of violence threatens to derail American efforts to mediate a rapprochement between Saudi Arabia and Israel, as the Kingdom will normalize relations with Israel in exchange for a defense deal between Washington and Riyadh.
The normalization of Saudi-Israeli relations is likely to freeze recent moves aimed at achieving a breakthrough in relations between Saudi Arabia and Iran.
“Increasing geopolitical risks in the Middle East should support oil prices, and more volatility can be expected,” analysts from ANZ Bank said in a note to clients.
The attacks sparked condemnation from Western countries, but Iran and Hezbollah, Iran’s ally in Lebanon, publicly praised them.
Market attention turned to the possibility of Iran’s involvement in the attacks, which the Israeli authorities have already claimed.
“For this conflict to have a lasting and meaningful impact on oil markets, there must be a sustained reduction in oil supply or transport,” Vivek Dhar, an analyst at the Commonwealth Bank of Australia, said in a note.
He added, “If Western countries officially link Iranian intelligence to the Hamas attack, Iranian oil supplies and exports will face imminent negative risks.”
2023-10-09 00:35:57
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