As Middle East turmoil rumbles markets, oil prices increase by more than $4

9 Oct 2023 , 09:20 AM

Early Asian trading on Monday saw an increase in oil prices of more than $4 a barrel as political unrest spread throughout the Middle East following dramatic military engagements between Israeli and Hamas forces over the weekend.

Brent crude was up $4.18, or 4.94%, to $88.76 per barrel, while U.S. West Texas Intermediate crude was up $4.23, or 5.11%, to $87.02 per barrel.

The increase in oil prices reversed last week’s downward trend, which was the worst weekly fall since March. Amid worries about rising interest rates and their effects on demand globally, Brent plummeted by about 11%, and WTI fell by more than 8%.

The deadliest military assault on Israel in decades was launched by the Palestinian Islamist group Hamas on Saturday, killing hundreds of Israelis and sparking a wave of Israeli air attacks on Gaza in retaliation that continued through Sunday.

U.S. efforts to mediate a reconciliation between Saudi Arabia and Israel, in which the kingdom would normalize relations with Israel in exchange for a defence agreement between Washington and Riyadh, appear to be in jeopardy as violence has broken out.

Saudi officials allegedly informed the White House on Friday that they would be open to increasing output under the proposed Israel contract for the following year.

After Saudi Arabia and Russia, two important producers, curtailed their supplies for several months, a boost in Saudi output would have helped to ease the supply crunch.

Recent steps toward detente between Saudi Arabia and Iran would probably come to a halt if relations between Israel and Saudi Arabia were normalized.

Western countries condemned the strikes, but Iran and Hezbollah, Iran’s allies in Lebanon, openly hailed them.

The focus of the market has shifted to the assertion made by Israeli officials that Iran was involved in the assaults.

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