Oil prices rose by about $2 on Wednesday, rebounding from 7-week lows, as the death of Hamas leader in Iran increased tensions in the Middle East and overshadowed concerns about weak demand in China, UNN reports citing Reuters.
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Brent futures rose $1.95, or 2.5%, to $80.58 per barrel by 13:31 GMT (16:31 Kyiv time), while the more active October contract rose $2.14 to $80.21.
Futures for U.S. West Texas Intermediate crude rose by $2.23, or 3%, to $76.96 per barrel.
A 0.4% drop in the US dollar index also supported prices. A weaker dollar could increase demand for oil, making dollar-denominated commodities such as oil cheaper for holders of other currencies.
A day earlier, Brent and WTI fell by about 1.4%, closing at their lowest level in seven weeks.
Tensions in the Middle East have escalated following news of the assassination of Hamas leader Ismail Haniyeh in Iran.
Блінкен заявив, що США не причетні до вбивства лідера ХАМАСу31.07.24, 15:36
This comes a day after the Israeli government claimed to have killed a top Hezbollah commander in an air strike on Beirut in response to Saturday's rocket attack on Israel.
Separately, the United States also struck Iraq in the latest conflict in the region.
"The overnight events and increased geopolitical risk have only temporarily delayed oil benchmarks. Unless oil and gas infrastructure is hit, the latest spike is unlikely to last," said Gaurav Sharma, an independent oil analyst in London.
The conflict in the Middle East did not affect supplies from the region.
Analysts say that the large reserve production capacity of OPEC countries has also limited the impact of the conflict in the Middle East.
"However, in July, Brent and WTI are on track for their biggest monthly losses since October 2023 amid continued concerns about China's demand outlook and expectations that OPEC+ will stick to its current production deal and begin to reverse some of the production cuts from October," the publication writes.
On Thursday, OPEC+ chief ministers will hold an online meeting of the Joint Ministerial Monitoring Committee (JMMC).
The slowdown in fuel demand in China, the world's largest importer of crude oil, is also putting pressure on oil markets.
China's manufacturing activity contracted for the third straight month in July, an official survey showed on Wednesday.
"Concerns about Chinese demand remain elevated as today's PMIs declined and the manufacturing sector continues to contract. This suggests that any additional gains due to heightened tensions in the Middle East may remain limited and short-lived," said Haralampos Pisouros, senior investment analyst at XM Brokerage.
Прямі іноземні інвестиції в Китай рекордно впали у першому півріччі30.07.24, 10:25