Oil Rises On Renewed Israel/Hamas War Expansion Fears

Meanwhile, Libya calls for oil embargoes against Israel supporters: File Image/Pixabay.

Rudderless oil traders on Wednesday, having in earlier sessions caused commodity prices to drop due to cautious optimism that the Israel/Hamas conflict could be contained, reverted to worrying about the potential for it to spread and cause supply disruptions; as a result, prices settled up by about 2 percent.

Brent rose $2.06, or 2.34 percent, to settle at $90.13 per barrel, while West Texas Intermediate rose $1.65, or 1.97 percent, to close at $85.39 per barrel.

The gains were capped, however, by the Energy Information Administration reporting a 1.4 million barrel increase in U.S. inventories, exceeding the 240,000-barrel gain expected by analysts.

More bearish news came in the form of European Central Bank data, which showed that bank lending across the euro zone came to a near standstill last month – an indication that a recession may soon follow.

Rebecca Babin, a senior energy trader at CIBC Private Wealth, said, "Crude is trading from headline to headline as the market tries to price in the potential" of war involving multipleMiddle East countries.

She added, "Living headline-to-headline keeps traders on the edge of their seats and likely to react quickly before understanding the full impactions of what is happening."

The fears were triggered by Israeli prime minister Benjamin Netanyahu stating during a televised speech that his country is in a battle for its existence and that he won't explain the reasons for the timing of a planned ground assault; this was contrasted by the U.S. and Saudi Arabia agreeing to pursue diplomatic efforts to maintain stability across the Middle East.

In other oil related news on Wednesday, Turkish and Libyan media reported that Libya's House of Representatives has called for the exit of ambassadors supporting Israel and demanded that Libyan oil exports to the countries they represent (the U.S., UK, France, and Italy) be halted.

Parliamentary spokesman Abdullah Belihaq said in a statement on Wednesday, "We demand the government halt oil and gas exports to countries supporting Israel in case the Israeli massacres are not stopped."