By Adedapo Adesanya
Brent crude jumped by 3.3 per cent or $2.64 to $82.30 per barrel on Monday on expectations of a widening Middle Eastern conflict that could tighten global oil supplies.
Also, the US West Texas Intermediate (WTI) crude futures appreciated by 4.2 per cent or $3.22 to $80.06 a barrel during the session after the US Defense Department said over the weekend that it would send a guided missile submarine to the Middle East as the region braces for possible attacks on Israel by Iran and its allies.
Israel has placed its military on its highest alert level as it braces for a potential assault while the US said it believed an attack by Iran or a proxy group could occur this week. The US said it was sending a guided missile submarine and other naval resources to the area, too.
The anticipated strike had been promised as retribution for the killings of senior commanders in the Hamas and Hezbollah militant groups, which are backed by Iran.
Business Post reports that an attack could widen the Middle Eastern conflict while tightening access to global crude supplies and boosting prices.
According to market analysts, such an attack could lead the US to place embargos on Iranian crude exports, potentially affecting 1.5 million barrels per day of supply.
Should the conflict escalate, Israel might decide to target Iranian oil and impede the production of crude from other major producers in the region, such as Iraq.
Support is coming from improved US economic data, which eased fears of a recession in the world’s largest economy.
Investors were looking ahead to US consumer price index data for July on Wednesday, which could support an anticipated ease in interest rates.
Interest rates could be lowered by the US Federal Reserve as early as next month since inflation seemed to be abating enough. Rate reductions often stimulate the economy, which boosts demand for fossil fuels like oil.
July’s consumer price increased in China, the world’s largest oil importer, and boosted oil prices.
On the Russia-Ukraine front, After Ukraine increased military activity near the border just days after engaging in its largest incursion into sovereign Russian territory since the beginning of the war, Russia evacuated civilians from part of a second area next to its neighbours.