BEIJING, Oct 9 — Oil prices jumped greater than $3 a barrel in early Asian trade on Monday, as dramatic military clashes between Israeli and Hamas forces over the weekend deepened political uncertainty across the Middle East.
Brent crude LCOc1 rose $3.34, or 3.95%, to $87.92 a barrel, while U.S. West Texas Intermediate crude CLc1 was at $86.23 a barrel, up $3.44, or 4.16%.
Palestinian Islamist group Hamas on Saturday launched the most important military assault on Israel in a long time, killing tons of of Israelis and triggering a wave of retaliatory Israeli air strikes on Gaza that continued through Sunday.
The eruption of violence threatens to derail U.S. efforts to broker a rapprochement between Saudi Arabia and Israel, wherein the dominion would normalize ties with Israel in return for a defense deal between Washington and Riyadh.
A normalization of Saudi-Israeli relations would likely freeze recent moves toward detente between Saudi Arabia and Iran.
“Increasing geopolitical risk within the Middle East should support oil prices… higher volatility could be expected” analysts from ANZ Bank said in a client note.
The attacks drew condemnation from Western nations but were openly praised by Iran and by Hezbollah, Iran’s allies in Lebanon.
Market attention has turned to the opportunity of Iranian involvement within the attacks, which Israeli authorities have already alleged.
“For this conflict to have an enduring and meaningful impact on oil markets, there have to be a sustained reduction in oil supply or transport,” Vivek Dhar, an analyst at Commonwealth Bank of Australia, said in a note.
“If Western countries officially link Iranian intelligence to the Hamas attack, then Iran’s oil supply and exports face imminent downside risks,” Dhar said.
