Oil up with soaring Middle East tension, strong US demand

Oil prices increased on Wednesday after the assassination of Ismail Haniyeh, head of the Hamas group, exacerbated tension in the Middle East.

International benchmark Brent crude traded at $79.56 per barrel at 10.03 a.m. local time (0703 GMT), a rise of 1.91% from the closing price of $78.07 per barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $76.29 per barrel at the same time, a 2.09% increase from the previous session that closed at $74.73 per barrel.

Latest events in the Middle East which fuel fears of a widening conflict in the oil-rich region is pushing oil prices up.

The Hamas group confirmed Haniyeh’s death in ‘a treacherous assassination’ in Tehran. In the early hours on Wednesday, the Iranian Foreign Ministry stressed that investigation is underway.

Israel has made no immediate announcement about the assassination.

Concerns over a full-blown war between Israel and Hezbollah has grown amid an exchange of cross-border attacks between the two sides.

Oil prices also surged over signals of greater oil demand in the world’s biggest oil consumer. The American Petroleum Institute (API) reported a 4.49 million barrel decrease in US crude oil inventories late Tuesday.

Official figures from the Energy Information Administration (EIA) will be released later in the day, and if a decrease in crude oil is confirmed, prices are expected to climb further.

The weakening of the US dollar against other currencies eased the rise in oil prices. The weak dollar is expected to enhance demand by making oil cheaper for those who use foreign currencies. The US dollar index, which measures the US dollar’s value against other currencies, fell 0.17% to 104.145.