Oil rises as Middle East tensions stoke supply fears

Crude oil prices are sharply higher today, with WTI trading at $68.52 a barrel, up 1.26%, and Brent crude at $72.27 a barrel, up 0.94%. These gains are primarily driven by escalating tensions in the Middle East, particularly the intensification of the conflict between Israel and Hezbollah. This volatility is causing fears of further disruptions to oil supplies and shipping routes.

Israel recently launched an airstrike targeting Hezbollah’s headquarters in Beirut, marking the strongest attack in nearly a year of ongoing conflict. Although the fate of the targeted Hezbollah leader, Hassan Nasrallah, is unconfirmed, the strikes have heightened geopolitical concerns. With Hezbollah retaliating with rocket fire and maritime security warnings issued to ships in Israeli ports, the conflict poses a direct risk to regional sea lanes. Yemen’s Houthis have also stepped up attacks on US ships and Israeli targets, further destabilizing the area.

Growing uncertainty in the region, along with fears of more direct attacks in ports such as Haifa and Eilat, have led to heightened risk assessments for shipping and oil. Insurance premiums are expected to rise as the potential for collateral damage to Israeli and neighboring maritime infrastructure looms large. Investors are responding by raising oil prices, anticipating supply disruptions and increased demand for safe oil reserves amid instability. The situation remains fluid and further price increases are likely if the conflict escalates further.

Brent crude has been trading lower since last week, with Sunday’s price at $74.47 a barrel. Brent is also down and stronger compared to a month ago, when prices were closer to $78 a barrel.

By Julianne Geiger for Oilprice.com

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