Oil soars 6% on geopolitical escalation

On Friday, oil prices rose by about 6%, with Brent recording its largest weekly gain since February. As soon as Israel started conducting ground incursions into the Gaza Strip, investors factored in the likelihood that the Middle Eastern conflict may intensify.

A week after the terrorist Palestinian group’s murderous assault in southern Israel, Israel announced a change from an air war to ground operations to ferret out Hamas fighters. US West Texas Intermediate (WTI) crude rose $4.78, or 5.8%, to $87.69 per barrel while Brent futures closed up $4.89, or 5.7%, at $90.89 per barrel.

The daily percentage advances for both benchmarks were the largest since April. Additionally, Brent saw a weekly gain of 7.5%, the highest since February. For the week, WTI increased 5.9%. Because Israel is not a major producer, the Middle East conflict has not had a significant influence on the world’s oil and gas supplies.

However, investors and market watchers are analysing how it can worsen and what it might imply for supply from neighbouring nations in the region with the highest oil production in the world. After Israel ordered more than a million people to leave the northern half of the territory within 24 hours, some inhabitants of Gaza were fleeing their homes on Friday to avoid an Israeli assault.

Oil prices are anticipated to exceed $100 per barrel due to the current Middle Eastern crisis, according to Iran’s Oil Minister Javad Owji on Friday. As the war worsens, Saudi Arabia is postponing U.S.-backed efforts to normalise relations with Israel, indicating a swift reconsideration of its foreign policy priorities.

Since Saudi Arabia told the White House it was willing to increase oil output early next year to help seal the deal, this may have repercussions for the supplies.

The Organization of the Petroleum Exporting Countries (OPEC) maintained its projection for rise in global oil demand, noting indications of a healthy global economy thus far this year and anticipated future increases in demand in China, the largest oil importer in the world.