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LONDON, Oct 9 (Reuters) – Oil prices rose more than 2% on Monday as military clashes between Israel and Palestinian Islamist group Hamas raised fears of a wider conflict in the Middle East.
Brent crude was up $2.28, or 2.7%, at $86.86 a barrel by 0859 GMT, while U.S. West Texas Intermediate crude was up $2.44, or about 3%, at $85.23 a barrel. Both benchmarks rose more than $4 a barrel early in the session.
The surge in oil prices reversed last week’s decline – the biggest weekly decline since March – in which Brent fell nearly 11% and WTI retreated more than 8% as a gloomy macroeconomic outlook weighed on global demand. Increased concerns.
While the underlying supply-demand balance is unaffected, Tamas Varga of oil broker PVM said, “Any increase in tensions in the Middle East usually leads to a rise in oil prices and this time it is no different”.
Hamas on Saturday launched its largest military attack on Israel in decades, prompting a wave of retaliatory Israeli airstrikes on Gaza.
The explosion of violence threatens to derail US efforts to broker a rapprochement between Saudi Arabia and Israel, in which the kingdom would normalize ties with Israel in exchange for a defense deal between Washington and Riyadh.
Saudi officials reportedly told the White House on Friday that they are willing to increase production next year as part of the proposed Israel deal. Riyadh and Moscow have agreed to a joint voluntary cut of 1.3 million barrels per day (bpd) by the end of 2023.
City analysts say the question is how long will this boom in oil continue.
“Timing is everything and the attacks would almost certainly postpone any Saudi-Israeli rapprochement, as well as reduce the risk of Saudi Arabia cutting an additional 1 million bpd if the recent decline in prices resumes.” Or is expected to have a high probability of termination.”
There are also questions about whether Iran will be drawn into the conflict.
“If conflict engulfs Iran… up to 3% of global oil supply would be at risk. And if a wider conflict occurs, affecting transit through the Strait of Hormuz, about 20% of global oil supply would be at risk.” can be taken hostage.” energy analyst Saul Cavonnick told Reuters.
Reporting by Natalie Grover in London and Andrew Healey in Beijing, additional reporting by Emily Chow in Singapore; Editing by Miral Fahmy and Jason Neely
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