Oil Rises After Middle East Tension, US Stocks Limit Fueling Supply Concerns; Brent rose 2% to $86/bbl

Oil prices rose on Thursday as the war in the Middle East continued to fuel supply concerns, while an unexpected rise in US crude and gasoline capped price gains.

Brent crude futures were up 92 cents, or 1.08 percent, at $86.17 a barrel by 09:46 EDT (1446 GMT). U.S. West Texas Intermediate crude futures were up 86 cents, or 1.06 percent, at $81.76.

Both benchmarks settled slightly higher on Wednesday.

Cross-border tensions between Israel and Lebanon’s Hezbollah have escalated, sparking fears that a full-scale war could spill over into other countries, including major oil producer Iran.

The

French Ministry of Foreign Affairs

said that France was extremely concerned about the situation in Lebanon and called for restraint.

Any contagion could have a big impact on Middle East crude supplies, said Panmure Gordon analyst Ashley Kelty.

Turkish President Tayyip Erdogan said his country stood in solidarity with Lebanon and called on countries in the region to show their support.

Israel

they stormed a neighborhood

in Gaza City, telling the Palestinians as the tanks roll in that they must move south.

Israeli forces bombed the southern city of Rafah in what it called the final stages of an operation against Hamas militants.

The US Energy Information Administration (EIA) last week reported a 3.6 million barrel increase in the country’s crude oil inventories. Analysts polled by Reuters had expected a reduction of 2.9 million barrels.

US gasoline stocks rose by 2.7 million barrels. Analysts expected an extraction of 1 million barrels.

“We’re right now at the height of the summer driving season, with demand for gasoline and diesel peaking as people travel over the Fourth of July weekend, so for the markets to move sideways now, then it might even we see a decline after the holiday weekend. ”, said Tim Snyder, economist at Matador Economics