Oil jumps as killing of Hamas leader stokes geopolitical risk
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Crude prices have not reacted particularly sharply to recent developments in the war, which has been going since early October 2023.
PHOTO: REUTERS
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Oil jumped, extending an earlier gain, after Hamas said Israel killed its political leader, stoking tensions in a region that produces around a third of the world’s crude.
Brent crude rose to near US$80 a barrel after tumbling by 4.5 per cent over the previous three sessions, with West Texas Intermediate around $76.
Hamas said Israel killed its political leader, Ismail Haniyeh, in an airstrike in Iran. It followed an earlier attack by Israel on Beirut that killed a senior Hezbollah commander.
There has been an escalation in the conflict since last weekend, when a Hezbollah strike in the Israel-controlled Golan Heights killed 12 youngsters, potentially jeopardising the ongoing cease-fire talks between Israel and Hamas.
Oil traders have been assessing that risk and whether it might lead to more attacks on ships traveling through the Red Sea, or affect production and exports, particularly from Iran.
Crude prices have not reacted particularly sharply to recent developments in the war, which has been going since early October 2023.
The killing of Haniyeh “obviously strips away the hopes of a ceasefire”, said Ms Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova in Singapore.
“Since it happened in Tehran, it’s plausible that it can trigger a wider conflict and we may witness involvement from other countries.”
Away from the Middle East, the global demand picture remains subdued as a prolonged Chinese economic slowdown continues to weigh on sentiment.
Brent is set for a monthly drop of around 7 per cent, the biggest in 2024, although prices are being supported by Opec+, which is also known as the Organisation of the Petroleum Exporting Countries, supply curbs and expectations the Federal Reserve will start lowering interest rates soon.
In the United States, the American Petroleum Institute said crude inventories fell by 4.5 million barrels last week. If confirmed by official figures on July 31, it would mark the longest streak of declines since January 2022.
The Fed is widely expected to keep rates on hold when it meets on July 31 and traders will look to Chair Jerome Powell’s remarks for confirmation of bets that they will be cut in September. BLOOMBERG
