Oil prices rose more than 4% on Monday after the Palestinian Islamist movement Hamas launched a surprise offensive against Israel this weekend, raising concerns about the impact on supplies from the black gold-rich region.
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Brent rose 4.7% to $86.65 and West Texas Intermediate rose 4.5% to $88.39 in early trading in Asian markets.
Israel’s surprise attack and declaration of war on Sunday against the Palestinian Islamist movement has already claimed more than 1,100 lives and raises fears of a new rise in tensions in the Middle East.
“The key for markets is whether the conflict remains contained or spreads to other regions, particularly Saudi Arabia,” said ANZ analysts Brian Martin and Daniel Hynes.
“At least initially, markets appear to believe that the situation will remain limited in scope, duration and impact on oil prices. But we can expect greater volatility.”
This crisis comes as oil prices are already high due to concerns about production cuts by Russia and Saudi Arabia, raising the risk of global inflation.