After hundreds were killed in an explosion at a hospital in Gaza on Wednesday, tensions in the Middle East increased, raising worries about possible disruptions in the region’s oil supply.
At 0347 GMT, Brent crude futures increased $1.69, or 1.9 percent, to $91.59 per barrel. The price of a barrel of West Texas Intermediate crude (WTI) futures increased $1.84, or 2.1 percent, to $88.50.
Both benchmarks reached their highest levels in two weeks in earlier trade after each gained more than $2.
Following the Tuesday hospital explosion in Gaza City, which Israeli and Palestinian officials both claimed responsibility for, which killed about 500 Palestinians, markets began to take risk premiums into account.
After that, Jordan called off a summit with the United States’ President Joe Biden and the leaders of Egypt and Palestine.
“The cancellation of a summit between Biden and Arab leaders reduces the likelihood of a diplomatic solution to the Israel Hamas conflict,” Vivek Dhar, an analyst at Commonwealth Bank of Australia, said in a client note.
The prospect of an Israeli ground offensive in Gaza has put markets on the edge.
“A long occupation looms as the scenario that pushes Brent oil futures above $US100/bbl because it raises the risk that the Israel-Hamas conflict expands and potentially draws in Iran directly,” Dhar said.
On Wednesday, Biden will travel to Israel to support that nation in its fight against the Islamist militant group Hamas. The White House stated that he will make it clear that he does not want the conflict to worsen.
Oil prices are also supported in the week ending October 13 as U.S. crude stocks decreased by about 40.4 million barrels, as per data from the American Petroleum Institute cited by market sources on Tuesday. That contrasted sharply with the analysts’ predicted 300,000 barrel draw.
Official U. S. data is due for release on Wednesday.
China’s economy grew faster than anticipated in the third quarter on the demand side, according to official data released on Wednesday. This suggests that a recent flurry of policy measures is supporting a tentative recovery.
According to official data, refiners in China increased their run rates in September to meet the high demand for fuel for transportation during the Golden Week holiday and to boost manufacturing.
As a result, the country’s oil refinery throughput reached a record daily rate, up 12% from the previous year.
However, since the real estate market continues to be a drag on China’s economic growth, analysts sounded cautious.
“The September data likely guarantee that China will hit its ‘around 5%’ growth target this year. That said, it will struggle to better it. The economic recovery is still in its infancy,” Moody’s Analytics economist Harry Murphy Cruise said in a note.
However, in the US, September retail sales rose more than forecast, raising hopes that the Federal Reserve will raise interest rates once more by year’s end. Oil demand may decline if interest rates are raised to combat inflation.
The Venezuelan government and its political opposition agreed to electoral guarantees for the 2024 presidential elections on Tuesday, opening the door for potential U.S. involvement in sanctions that could eventually increase oil supplies.
