- On Monday, oil prices increased by more than 3% as worries of a larger Middle East conflict were stoked by military skirmishes between Israel and the Palestinian Islamist organization Hamas.
- Brent crude was up US$2.70, or 3.2%, to US$87.28 a barrel by 1143 GMT, while U.S. West Texas Intermediate crude was at US$85.57 a barrel, up US$2.78 or 3.4%. Both benchmarks spiked by more than US$4 a barrel earlier in the session.
- The increase in oil prices reversed last week’s downward trend, which saw Brent fall by over 11% and WTI fall by more than 8% as worries about global demand grew more intense due to a gloomier macroeconomic outlook.
- According to Tamas Varga of oil broker PVM, “any rise in tension in the Middle East usually leads to an increase in oil prices and it is no different this time around” even though the fundamental supply-demand balance is untouched.
- Hamas launched the biggest military assault against Israel on Saturday, which sparked a surge of Israeli air attacks into Gaza in retaliation.
- Separately, on Monday, OPEC increased its medium- and long-term predictions for the global oil consumption, going against those of other forecasters, such as the International Energy Agency (IEA), which claimed that the demand might peak this decade.
