West Texas Intermediate (WTI) crude oil gained 0.9% to $78.6 per barrel as of 8:49 am AST Thursday, while Brent crude climbed 0.8% to $81.5 per barrel around the same time. Image by Vova Shevchuk / Shutterstock Oil prices rose in early trading on Thursday due to growing concerns about a broader Middle East conflict and its potential effects on the global oil market, triggered by the assassination of a Hamas leader in Iran.
Oil rises West Texas Intermediate (WTI) crude oil gained 0.9% to $78.6 per barrel as of 8:49 am AST Thursday, while Brent crude climbed 0.8% to $81.5 per barrel around the same time.
In the previous session, both benchmarks registered substantial gains due to the unabating Middle East conflict and growing tensions between Israel and Hezbollah after the former blamed the latter for a rocket strike on its Golan Heights territory.
Ismail Haniyeh, a prominent leader of the Palestinian liberation group Hamas, was assassinated in the Iranian capital of Tehran on Wednesday.
"Oil markets are justifiably worried that the assassination of Haniyeh will bring Iran more directly into the war with Israel. And that could put at risk Iran's oil supply and related infrastructure," Vivek Dhar, an analyst at Commonwealth Bank of Australia, wrote in a client note.
Dhar added that markets will be concerned about Iran's power to increase tensions due to its control of the Strait of Hormuz.
"Blockading the key waterway threatens the transport of 15-20% of global oil supply. With limited spare pipeline capacity to bypass such a blockade, the Strait of Hormuz looms as a major potential disruption risk for oil markets," he added.
US crude inventories fall Apart from geopolitical tensions, official data from the US has also added to the upward pressures on oil prices.
For instance, the US Energy Information Administration (EIA) reported that the country's crude inventories fell by 3.4 million barrels during the week ended July 26 to 433 million barrels due to strong export demand. With the US being the largest consumer of oil globally, the drop in crude stockpiles indicated higher demand levels that tend to drive oil prices.
Furthermore, the US dollar index declined again on Thursday, as the US Federal Reserve maintained interest rates at the same level but reinforced the possibility of a reduction in interest rates in September. A lower-valued dollar can lead to an upsurge in oil demand from investors possessing other currencies.
