Oil extends gain as deepening Mideast crisis puts market on edge

Oil advanced as geopolitical tensions ratcheted higher in the Middle East, with prices poised for a second straight weekly gain.

Global benchmark Brent rose above $93 a barrel, while West Texas Intermediate neared $91. The US is seeing stepped-up drone attacks in Iraq and Syria, the Pentagon said, while an American destroyer intercepted cruise missiles fired toward Israel by Houthi rebels in Yemen. In addition, Israel is expected to launch a ground invasion of Gaza after massing troops on the border.

Oil has been pushed higher by the crisis, which was ignited by the October 7 attack on Israel by Hamas, designated a terrorist group by the US and the European Union. There are concerns that the conflict will spread to other states including Iran, and could even potentially draw in the US, which has beefed up its local military presence substantially. The region supplies about a third of the world’s crude.

“The risk premium in crude has shot up again,” said Vandana Hari, founder of consultancy Vanda Insights, citing the latest incidents including the missiles from Yemen. “As long as the Israel-Hamas tensions run high, crude will remain susceptible to further spikes on signs of an escalation.”

US President Joe Biden visited the region briefly in midweek to offer Israel his support while at the same time pushing the case for the conflict to be contained. A planned meeting with Arab leaders was cancelled, however, following a deadly blast at a hospital in the Gaza Strip.

Crude prices have been supported this week by stockpiles news. While data showed commercial inventories at the key hub at Cushing, Oklahoma, plunged to the lowest level since 2014, the US energy department said that it aimed to buy as much as 6 million barrels for the Strategic Petroleum Reserve.

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