By Adedapo Adesanya
Brent crude jumped nearly 6 per cent or $4.89 to $90.89 per barrel, posting its highest weekly gain since February on the possibility that the conflict in the Middle East could widen as Israel began ground raids inside the Gaza Strip.
Also, the price of the US West Texas Intermediate (WTI) crude gained $4.78 or 5.8 per cent to close at $87.69 a barrel, recording its highest daily percentage growth since April. For the week, Brent grew by 7.5 per cent, its biggest since February, while WTI climbed 5.9 per cent.
The market reacted as Israel announced the move which marked a shift from an air war to ground operations to root out Hamas fighters a week after Hamas launched an attack in Southern Israel.
Although the conflict in the Middle East has had little impact on global oil and gas supplies, since Israel is not a big producer, investors and market observers are assessing how it could escalate and what it might mean for supplies from nearby countries in the world’s top oil-producing region.
Reuters reported that residents in Gaza were abandoning their homes on Friday even after Hamas told them not to, to escape from the path of an Israeli onslaught. Earlier, Israel ordered more than a million people to leave the northern half of the territory within 24 hours.
Meanwhile, Iranian Oil Minister, Mr Javad Owji said on Friday that oil prices are expected to reach $100 per barrel due to the current situation in the Middle East.
Iran due to its interests has discussed the Israeli-Hamas conflict with the head of the Lebanese armed group Hezbollah, which has launched its own cross-border attacks on Israel.
This could spur a move from the US, which would tighten enforcement of sanctions on Iran’s oil exports due to any role it may have in the conflict.
This will cause Iran’s oil supply to fall and further tighten the global supply of the commodity.
Meanwhile, the top producer in the region, Saudi Arabia has paused a US-backed plan to normalize ties with Israel as it continues to observe development.
This may also affect supply after the country assured the US government that it was willing to boost oil production early next year to help secure the deal.
Also boosting prices was the US move to impose sanctions on owners of tankers carrying Russian oil priced above the Group of Seven’s price cap of $60 a barrel. The country had reportedly found a loophole in the mechanism designed to punish Russia for its invasion of Ukraine last year.
On the US supply front, drillers this week added four oil rigs in the biggest weekly rise since March, according to Baker Hughes.
Modupe Gbadeyanka