Drilling rigs are seen at the Vaca Muerta shale oil and gas well in the Patagonian province of Neuquen, Argentina, January 21, 2019. Portal/Agustin Marcarian/File Photo acquire license rights
BEIJING, Oct 9 (Portal) – Oil prices rose more than $3 a barrel in Asian trading on Monday as military clashes between Israel and the Palestinian Islamist group Hamas exacerbated political uncertainty across the Middle East and raised concerns about the Deliveries arose.
Brent crude rose $3.10, or 3.67%, to $87.68 a barrel at 0400 GMT, while U.S. West Texas Intermediate crude was at $86.05 a barrel, up 3 .26 USD or 3.94%. Both benchmarks had previously risen by more than $4 a barrel before falling slightly.
“Increasing geopolitical risk in the Middle East is likely to support oil prices… higher volatility is expected,” ANZ Bank analysts said in a note to clients.
The rise in oil prices reversed last week’s downward trend – the biggest weekly decline since March – which saw Brent fall about 11% and WTI fall more than 8% amid concerns about high interest rates and their impact on global demand .
On Saturday, Hamas launched the largest military attack on Israel in decades, killing hundreds of Israelis and unleashing a wave of Israeli retaliatory attacks on Gaza that also killed more than 400 people.
“Oil’s risk premium is rising on the prospect of a major conflagration that could spread to nearby major oil-producing nations such as Iran and Saudi Arabia,” energy analyst Saul Kavonic told Portal.
The outbreak of violence threatens to derail U.S. efforts toward a rapprochement between Saudi Arabia and Israel that would see the kingdom normalize relations with Israel in return for a defense deal between Washington and Riyadh.
Saudi officials reportedly told the White House on Friday that they were ready to increase production next year as part of the proposed Israel deal.
An increase in Saudi production would have helped ease shortages after months of supply cuts by key producers Saudi Arabia and Russia.
Normalizing Saudi-Israeli relations would likely freeze recent détente efforts between Saudi Arabia and Iran, which has openly praised the Hamas attacks.
Analysts fear oil supplies could choke if Iran is drawn into the conflict.
“If the conflict also reaches Iran, up to 3% of global oil supplies will be at risk. And if a major conflict occurs that ultimately affects transit through the Strait of Hormuz, about 20% of the world’s oil supply could be held hostage,” Kavonic said.
Reporting by Andrew Hayley in Beijing, additional reporting by Emily Chow in Singapore; Editing by Jamie Freed and Sonali Paul and Miral Fahmy
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