Oil prices rose on Wednesday after a blast at a Gaza hospital that left hundreds of Palestinians dead and caused concerns about global oil supply disruption.
Brent crude futures, the global benchmark, advanced $3, or more than 2%, to $92.90 a barrel, while West Texas Intermediate crude (WTI) futures were up $3 (2.1%) at $89.66 a barrel, with both benchmarks reaching their highest levels in a fortnight.
At least 500 people were killed in the deadly blast at the Gaza City hospital on Tuesday, with Israeli and Palestinian officials blaming each other.
A summit at which the US president, Joe Biden, was due to meet Palestinian and Egyptian leaders was hastily cancelled by its host, Jordan.
“The cancellation of a summit between Biden and Arab leaders reduces the likelihood of a diplomatic solution to the Israel Hamas conflict,” Vivek Dhar, an analyst at Commonwealth Bank of Australia, said.
“A long occupation looms as the scenario that pushes Brent oil futures above $100 a barrel because it raises the risk that the Israel Hamas conflict expands and potentially draws in Iran directly.”
Dhar noted the markets’ growing concerns about a threatened Israeli ground offensive in Gaza.
The conflict has led to investors moving into safe haven assets, with gold up 0.8% to a one-month high of $1,938 an ounce on Wednesday morning.
Meanwhile, US crude stocks fell by about 4.4m barrels in the week ending 13 October, according to Reuters. That was much steeper than a 300,000 barrel draw that analysts had forecast, with official US government data due later today.
Separate data released early on Wednesday showed the Chinese economy grew by a better-than-expected 4.9% in July-September quarter, indicating that demand for oil in the world’s second largest economy may push higher.
The Moody’s Analytics economist Harry Murphy Cruise said: “The September data likely guarantee that China will hit its ‘around 5%’ growth target this year. That said, it will struggle to better it. The economic recovery is still in its infancy.”
