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Oil prices surged in Asian trade on Wednesday following reports of a significant escalation in Middle East tensions. The uptick was driven by news of the reported death of Hamas leader Ismail Haniyeh in an Israeli airstrike in Tehran, Iran’s capital. This development has raised concerns about a potential spike in regional instability, which could impact oil supply routes and global markets.
Brent crude futures for September delivery jumped 1% to $79.45 a barrel, while West Texas Intermediate (WTI) crude futures rose 1.2% to $75.64 a barrel by 23:05 ET (03:05 GMT). These gains come after oil prices had dipped to nearly two-month lows.
The situation in the Middle East has been tense, with the Israel-Hamas conflict stretching into its ninth month. The reported death of Haniyeh adds another layer of complexity to the conflict, with fears of a broader regional confrontation growing. Earlier, Israel carried out strikes against Hezbollah, an Iran-backed militant group based in Lebanon, in retaliation for a rocket attack on the Israeli-occupied Golan Heights. The strikes reportedly resulted in the death of a senior Hezbollah commander.
These developments have led traders to factor in a higher risk premium for crude oil, concerned that escalating tensions could disrupt supplies from the oil-rich region. The Middle East is a critical area for global oil production and any conflict there can have significant implications for oil prices and global energy markets.
Adding to the market’s concerns, data from the American Petroleum Institute (API) indicated that U.S. oil inventories have declined for the fifth consecutive week, signaling tighter market conditions in the world’s largest oil consumer. This data has further supported the rise in oil prices.
Efforts by the United States and the United Nations to mediate a ceasefire between Israel and Hamas have so far been unsuccessful, leaving the situation highly volatile and unpredictable.
