The Israel-Hamas conflict deepens and sparks Middle East protests. Oil prices rose on Wednesday as tensions rose in the Middle East after an explosion at a hospital in Gaza killed hundreds of people. Concerns have grown about potential oil supply disruptions in the region.
Brent crude futures rose $1.75, or 2%, to $91.65 a barrel at 06:09 GMT. West Texas Intermediate crude oil (WTI) futures rose $1.91, or 2.2%, to $88.57 a barrel.
In the previous session, both indicators gained more than $2, hitting two-week highs.
Markets are factoring in risk premiums triggered by the deaths of hundreds of Palestinians in an explosion at a Gaza City hospital on Tuesday that Israeli and Palestinian officials blamed on each other. Additionally, markets are concerned about the threat of Israel’s ground attack on Gaza.
Jordan canceled the summit to be attended by US President Joe Biden and Egyptian and Palestinian leaders. The cancellation of the summit between Biden and Arab leaders reduces the possibility of a diplomatic solution to the Israel-Hamas conflict.
A prolonged occupation serves the scenario that would push Brent oil futures above $100 per barrel. This will lead to an expansion of the Israel-Hamas conflict, potentially increasing the risk of drawing Iran into the conflict.
Biden will visit Israel on Wednesday to show his support for the country in its war with the Islamist militant group Hamas. However, the White House is expected to make it clear that it does not want the conflict to escalate.
U.S. crude oil inventories, which also support oil prices, fell by nearly 4.4 million barrels in the week ending Oct. 13, market sources said on Tuesday, data from the American Petroleum Institute (API). That’s much higher than the 300,000-barrel decline analysts had predicted.
Official US government data will be released later Wednesday.
On the demand side, official data on Wednesday showed China’s economy grew faster than expected in the third quarter; This suggests that recent policy measures are helping to support the temporary recovery. China’s 3rd quarter GDP increased by 4.9%, above the market forecast.
China’s official data also showed that the country’s oil refinery output hit a record daily rate in September, up 12% from a year earlier, as refineries increased operating rates to meet strong demand for shipping fuel during the Golden Week holiday and a recovery in production.
However, analysts have been cautious about China’s economic growth as the real estate sector continues to pose a hurdle.
September data likely verifies that China may hit its around 5 percent growth target this year, and China will struggle to improve on this.
Meanwhile, retail sales in the US increased more than expected in September, raising expectations that the Fed will raise another interest rate by the end of the year. Interest rate increases aimed at curbing inflation could slow economic growth and reduce oil demand.
Venezuela’s government and political opposition agreed on Tuesday to electoral guarantees for the 2024 presidential election, paving the way for possible U.S. sanctions relief that could boost oil supplies.
