Hong Kong CNN –
Oil prices rose above $91 a barrel on Monday as diplomatic efforts to address the Middle East crisis intensified, but fell back later in the day and approached Friday levels.
Investors fear the war between Israel and Hamas could spark a wider conflict in the oil-rich region and further deplete global oil supplies.
Brent crude futures, the global oil benchmark, rose to as high as $91.2 a barrel in Asia on Monday, up slightly from Friday’s settlement price of $90.89. They last traded at $90.77 a barrel.
West Texas Intermediate, the U.S. benchmark, briefly rose to $87.98, compared with Friday’s close of $87.68. The last trade took place at this closing price.
Both future prospects rose sharply on Friday after the Israeli military warned more than a million people to leave the northern Gaza Strip, sparking fears of a possible ground offensive by Israel in retaliation for Hamas terror attacks that killed at least 1,400 people.
Speaking to CBS on Sunday, US national security adviser Jake Sullivan said that while there was no new information that the threat level from Iran had changed, “there is a risk of an escalation of this conflict.”
Analysts at ANZ Research expect oil prices to reach $100 a barrel in the near term due to growing risks of regional escalation.
Neither Israel nor Hamas are major suppliers of oil, but the risk to oil markets will increase if “the conflict expands,” they wrote in a research note on Friday.
“If [Iran] If the company participates, up to 20 million barrels of oil per day could be at risk of disruption directly and through disrupted logistics,” they added.
“Middle East risk” dominates the global asset price landscape, said Stephen Innes, managing partner at SPI Asset Management.
“The ongoing conflict could place even greater strain on global oil supplies over time, potentially reducing the likelihood of Saudi-Israeli normalization and posing downside risks to Iranian oil production, leading to further increases in oil prices,” he said .
Global oil prices had risen since late June as production cuts by Saudi Arabia and Russia fueled concerns about reduced global supply. New U.S. measures unveiled last week aimed at raising the cost of Russia’s attempts to circumvent its oil price cap may also have caused oil prices to rise.
In foreign exchange markets The shekel weakened on Monday, trading 0.3% lower at 3.988 per US dollar. The Israeli currency has crashed almost 4% in the last 10 days.
Israel’s central bank said last week that it plans to sell up to $30 billion in foreign currency to stabilize the shekel after it fell sharply following Hamas attacks.