Oil prices have surged amid renewed concerns over a potential Israeli retaliation against Iran following Tehran’s missile attack on Israel on October 1.
Brent North Sea crude for December delivery rose by 1.68%, reaching $74.29 a barrel, while US West Texas Intermediate (WTI) for November delivery increased by 1.94%, settling at $70.56 a barrel.
“It’s another day of concern about the situation in the Middle East, and the market is trying to gauge the various reactions,” commented John Kilduff of Again Capital to AFP.
On Saturday, Israeli Prime Minister Benjamin Netanyahu accused Hezbollah of attempting to assassinate him after his private residence was targeted by a drone strike during his absence.
“Hezbollah, an ally of Iran, which tried to assassinate me and my wife, made a serious mistake,” Netanyahu stated. “I say to the Iranians and their partners in the Axis of Evil: whoever tries to harm the citizens of Israel will pay a high price.”
While Hezbollah has not claimed responsibility for the drone strike, the Iranian mission to the UN attributed the attack to the Lebanese group.
In response, the Israeli army conducted several airstrikes over the weekend in the southern suburbs of Beirut and eastern Lebanon, targeting Hezbollah positions.
These developments have reignited fears of escalation of the conflict in the Middle East and a possible retaliation by Israel against Iran's oil infrastructure in response to the missile attack.
“This situation is troubling for the oil market and continues to lend support to prices. The risk of the situation spiraling out of control remains,” analyzed Kilduff.
However, the rise in oil prices is being tempered by what Kilduff describes as insufficient demand, particularly from China, which is grappling with a slowdown in economic growth— “a significant obstacle for the market.”
Crude imports from China contracted in September for the fifth consecutive month year-on-year, falling 7.4% compared to August, according to official data.
To stimulate economic activity, China’s central bank announced a cut in two benchmark interest rates on Monday.
AFP
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