Oil prices jumped in early trading as rising tensions in the Middle East spark concerns about the potential for supply disruptions spreading in the regions.
The day range on Brent was US$91.15 to US$92.18 in the early premarket period. The range on West Texas Intermediate was US$87.64 to US$89.09. Both benchmarks were up more than 3 per cent in the predawn period.
“The explosion at a hospital in Gaza has quietly influenced the financial markets’ reaction to the Israel-Hamas conflict,” Stephen Innes, managing partner with SPI Asset Management, said.
“Initially, markets appeared to downplay the risk of a broader conflict. However, following the explosion, several key political leaders, including the Palestinian, Egyptian, and Jordanian leaders, canceled meetings with U.S. President Biden.”
The Globe reports that the explosion at a hospital sheltering displaced people in Gaza has reportedly killed hundreds, threatening to exacerbate the humanitarian crisis in the besieged Palestinian enclave and cause the war between Israel and Hamas to spread.
Meanwhile, Reuters reports this morning that OPEC+ is not planning to hold an extraordinary meeting or take any immediate action after Iran’s foreign minister called members of the Organization of Islamic Cooperation to impose an oil embargo and other sanctions on Israel. The report cites two unnamed sources from the producer group.
Prices were also supported by a bigger-than-expected decline in weekly crude inventories. The American Petroleum Institute said late Tuesday that U.S. crude stocks fell 4.4 million barrels for the week ended Oct. 13. Analysts had been expecting a drop of about 300,000 barrels, according to Reuters. More official U.S. government figures are due later Wednesday morning.