Oil prices surged over 1% in Asian trading on Wednesday following reports that Ismail Haniyeh, a leader of the Palestinian militant group Hamas, was killed in an Israeli strike in Tehran. This news has heightened concerns of escalating tensions in the Middle East, potentially disrupting oil supplies from the region.
Oil Price Movements
Brent crude futures for September delivery jumped 1% to $79.45 per barrel, while West Texas Intermediate (WTI) crude futures increased by 1.2% to $75.64 per barrel by 23:05 ET (03:05 GMT). The rise came as oil prices rebounded from nearly two-month lows.
Hamas Leader’s Death and Regional Tensions
Reports indicate that Ismail Haniyeh was killed in an Israeli airstrike in Iran’s capital, Tehran. This incident could escalate the ongoing Israel-Hamas conflict, which has persisted into its ninth month. Additionally, it may heighten tensions between Iran and Israel, which had seen a series of missile strikes earlier this year.
The reported death of Haniyeh follows recent Israeli strikes against Hezbollah, an Iran-backed armed group based in Lebanon. These strikes were retaliation for a rocket attack on the Israel-occupied Golan Heights over the weekend. Israel claimed to have targeted a major Hezbollah commander in this operation.
Traders are factoring in a greater risk premium for crude oil due to the potential for a broader Middle Eastern conflict that might disrupt oil supplies.
U.S. Inventory Data
According to the American Petroleum Institute (API), U.S. oil inventories experienced a draw of nearly 4.5 million barrels for the week ending July 26. This marks the fifth consecutive week of inventory draws, driven by strong summer fuel demand and disruptions from a recent hurricane in the Gulf of Mexico. This data aligns with expectations for similar trends in the upcoming official inventory report.
Upcoming Market Events
Despite Wednesday’s gains, oil’s recovery remains fragile amid concerns over weakening demand from China, the world’s top oil importer. Soft purchasing managers index readings from China have contributed to these concerns.
The market is also cautious ahead of a Federal Reserve interest rate decision and an upcoming meeting of the Organization of Petroleum Exporting Countries (OPEC). The Joint Ministerial Monitoring Committee of OPEC will meet on Thursday, with expectations that there will be no significant changes to production policies. However, key producers like Russia and Saudi Arabia may continue to avoid scaling back production cuts, which could provide some support to oil prices.
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