Oil prices jump on rising Middle East tensions
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The news: Oil prices have jumped overnight as investors worried the conflict in the Middle East could widen after the killing of Hamas' top political leader in Iran, and after a sharp fall in US crude stockpiles.
The numbers: Global benchmark Brent crude futures for October delivery rose 2.8% to USD80.84 a barrel. US West Texas Intermediate (WTI) crude futures climbed 4.3% to settle at USD77.91 a barrel, their biggest daily gain since October 2023.
The context: Geopolitical risk was the key driver of the rally in prices after tensions in the oil-producing Middle East region heated up overnight on news that Hamas leader Ismail Haniyeh was assassinated in Iran.
Just a day earlier, both Brent and WTI closed at their lowest levels in seven weeks on hopes of a Gaza ceasefire agreement that could ease tensions. This came a day after the Israeli government claimed it killed Hezbollah's most senior commander in an airstrike on Beirut.
Meanwhile, US crude stocks decreased by 3.4 million barrels last week, government data showed, more than triple the decline analysts had expected.
Limiting gains were concerns about fuel demand in China, the world's top crude oil importer. China's manufacturing activity in July shrank for a third month, an official factory survey showed on Wednesday. Ample spare production capacity held by OPEC members is also keeping prices in check.
The source: Reuters
