Oil Rises 1% as Middle East Tension Builds

By Adedapo Adesanya

Oil prices rose more than one per cent on Thursday as increasing Middle East tension pushed the market into bullish territory.

The global crude benchmark gained $1.19 or 0.84 per cent as it traded at $71.22 while the US West Texas Intermediate (WTI) moved up by 94 cents or 1.38 per cent to trade at $69.09 per barrel.

Prices returned to the bullish zone as Israeli jets struck rocket launch sites in Lebanon early on Thursday in response to two rockets fired towards Israel from Lebanese territory.

This escalated already heightened cross-border hostilities amid intensified tensions with Iran.

Business Post gathered that the rockets launched from Lebanon on Wednesday struck open areas in northern Israel, causing brush fires along the hilly frontier. There was no claim of responsibility for the attack, which came from an area of south Lebanon under the sway of Iranian-backed Hezbollah guerrillas.

This week’s cross-border fire came after a suspected drone attack last Thursday on a tanker off the coast of Oman that Israel, the United States and Britain blamed on Iran as it killed two people.

The growing tension comes as nuclear talks between Iran and Western powers that would ease sanctions on the Middle East giant’s oil exports appear to have stalled even as the country’s new conservative president was sworn in.

This new development also took the market’s attention from factors that had led to its plunge for three straight sessions.

Concerns over the recovery of global oil demand amid a surge in coronavirus cases are still active.

In the world’s largest exporting nation, China, the government has imposed curbs in some cities and cancelled flights, threatening fuel demand. In fellow Asian country, Japan, it is poised to expand emergency restrictions to more states.

In the United States, the world’s biggest oil consumer, COVID-19 cases hit a six-month high with more than 100,000 infections reported on Wednesday.

Analysts at investment bank UBS, however, said they expect oil prices to resume their upward trend despite pandemic concerns, projecting Brent crude will trade between $75 and $80 per barrel in the second half of 2021.