Oil jumps more than $4 as markets are affected by violence in the Middle East

Oil prices jumped more than $4 a barrel in early Asian trading on Monday, as political uncertainty worsened across the Middle East following the outbreak of violent clashes between Israeli forces and Hamas over the weekend.

The rise in oil prices came to reverse the downward trend last week, which witnessed the largest weekly decline since March, as Brent fell 11 percent and West Texas Intermediate crude fell more than 8 percent amid concerns about rising interest rates and their impact on global demand.

On Saturday, the Palestinian Islamic Resistance Movement (Hamas) launched the largest military attack on Israel in decades, killing hundreds of Israelis. In response, Israel carried out a wave of retaliatory air strikes on Gaza, killing hundreds.

The outbreak of violence threatens to derail American efforts to mediate a rapprochement between Saudi Arabia and Israel, as the Kingdom will normalize relations with Israel in exchange for a defense deal between Washington and Riyadh.

It was reported that Saudi officials informed the White House on Friday that they were ready to increase production next year as part of the proposed agreement with Israel.

Any increase in Saudi production would help ease supply scarcity after months of production cuts from Saudi Arabia and Russia, two of the main producers of crude.

The normalization of Saudi-Israeli relations is likely to freeze recent moves aimed at achieving a breakthrough in relations between Saudi Arabia and Iran.

The attacks sparked condemnation from Western countries, but Iran and Hezbollah, Iran’s ally in Lebanon, publicly praised them.

Market attention turned to the possibility of Iran’s involvement in the attacks, which the Israeli authorities have already claimed.