Oil jumps more than 2% as tensions escalate in the Middle East

Oil prices rose on Wednesday as tensions rose in the Middle East after hundreds were killed in a hospital explosion in Gaza, raising concerns about disruptions to oil supplies from the region.

By 0225 GMT, Brent crude futures increased $2.07, or 2.3 percent, to $91.97 per barrel. US West Texas Intermediate crude futures also rose $2.26, or 2.6 percent, to $88.92 per barrel.

Markets considered the risks after about 500 Palestinians were killed in a hospital explosion in Gaza City on Tuesday, for which Israeli and Palestinian officials exchanged blame.

Jordan then cancelled a summit it was scheduled to host with US President Joe Biden and Egyptian President Abdel Fattah al-Sisi and Palestinian President Mahmoud Abbas.

Markets are also concerned about Israel launching a ground attack on Gaza.

Biden is scheduled to visit Israel on Wednesday to show support for it in its war with Hamas.

According to market sources, oil prices also received support from a decline in US crude inventories by about 4.4 million barrels in the week ending October 13, citing American Petroleum Institute figures on Tuesday.

This sharply declined compared to analysts’ expectations of only 300,000 barrels.

Official data is scheduled to be released later on Wednesday.

On the demand side, official data showed on Wednesday that the Chinese economy grew faster than expected in the third quarter. This indicates that the recent recovery may be enough for Beijing to achieve its growth goal for the full year.

Meanwhile, US retail sales rose more than expected in September, boosting expectations that the Federal Reserve will raise interest rates again by the end of the year. Raising interest rates to reduce inflation could slow economic growth and reduce demand for oil.