By Adedapo Adesanya
The price of Brent crude oil grade returned to the $80 per barrel region on Monday, October 7, amid increased risk of a region-wide Middle East war, as it marked a year Hamas launched a fresh assault on Israel.
The oil benchmark appreciated by $2.88 or 3.7 per cent yesterday to settle at $80.93 per barrel, and the US West Texas Intermediate (WTI) crude grade advanced by $2.76 or 3.7 per cent to $77.14 per barrel.
This extends gains from last week, where Brent rose more than 8 per cent and WTI gained more than 9 per cent week-on-week, the most in more than a year.
This started after Iran’s October 1 missile barrage against Israel raised concerns that the response from the latter would aim at the former’s oil infrastructure.
Market analysts warned that oil prices could rise by another $3 to $5 per barrel.
The development continued on Monday as Iran-backed Hezbollah hit Israel’s third-largest city, Haifa, forcing investors to shift their former bearish positions.
Israel, meanwhile, looked poised to expand ground incursions into southern Lebanon on the first anniversary of the Gaza war that has spread conflict across the Middle East.
After a year of war, authorities have stated officially that 728 troops have been killed and 26,000 missiles have been fired at Israel, compared to over 40,000 killed in Gaza.
Some analysts have suggested that Israel could strike a key export artery for Iranian oil, among other oil and gas targets that the US has asked Israel to avoid.
An attack on Iranian energy facilities would not be Israel’s preferred course of action, JP Morgan commodities analysts wrote on Friday.
Still, low levels of global oil inventories suggest that prices are set to be elevated until the conflict is resolved.
OPEC and allies, including Russia, known collectively as OPEC+, are due to start raising production in December after cutting in recent years to support prices because of weak global demand.