Oil prices rose on Thursday, extending their big gains from the previous session after the assassination of Hamas leader Ismail Haniyeh in Iran, raising the risk of a wider Middle East conflict, as well as signs of strong demand for oil in the United States.
Brent crude futures rose 67 cents, or 0.84%, to $80.90 a barrel at the time of writing, while US West Texas Intermediate crude futures rose 68 cents, or 0.87%, to $87.59 a barrel.
The most active contracts for both benchmarks had jumped about 4% in the previous session.
Israel assassinated the head of the political bureau of Hamas, Ismail Haniyeh – according to a statement by the movement – less than 24 hours after the assassination of the military commander of Hezbollah, Fouad Shukr, in an Israeli strike on the capital, Beirut.
The two assassinations raise fears that Israel’s war on Gaza could turn into a wider war in the Middle East, which could disrupt oil supplies from the region.
“We fear that the region is on the brink of an all-out war,” Japan’s deputy UN representative, Shino Mitsuko, said on Wednesday, as the UN Security Council called for intensified diplomatic efforts.
Supporting data
Oil received support from a set of data issued by the United States, the world’s largest oil consumer, and a decline in the dollar.
Strong export demand pushed U.S. crude oil inventories down 3.4 million barrels in the week to July 26 to 433 million barrels, data from the U.S. Energy Information Administration showed.
US oil inventories have fallen for five straight weeks, the longest such streak since January 2021.
Separate data from the US Energy Information Administration on Wednesday showed that US oil demand in May was at an unprecedented level for the period, as gasoline consumption rose to its highest levels since pre-pandemic times.
In the context of the repercussions of the escalating war in the region, the Israeli currency (the shekel) continued its decline, as it fell to 3.79 shekels against the dollar from 3.76 shekels against the dollar at the beginning of trading.
It is noteworthy that the shekel ended the session on Tuesday at 3.75 shekels, according to data from the Bank of Israel and global exchange rate platforms.
Experts believe that the direct impact on Israel as a result of the two assassinations will appear directly on the exchange rate of the Israeli shekel, but the longer-term impact will depend on the response that Israel will receive from Iran or the fronts supporting the Palestinian resistance, which is what the markets are anticipating.
Israeli media reports that further unrest on the northern front (near the Lebanese border) could prompt the occupation army to call up more reserve soldiers, affecting the work of companies as well as further depreciating the shekel.
