Oil futures rebounded more than $1 a barrel from seven-week lows on Wednesday following the assassination of Hamas leader Ismail Haniyeh in Iran. This incident has heightened tensions in the Middle East, though concerns about weak demand from China continue to exert pressure on prices.
Brent crude futures saw an increase of $1.39, or 1.8%, reaching $80.02 a barrel by 0625 GMT before their expiry on Wednesday. The more active October contract rose to $79.41, up $1.34. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures climbed $1.38, or 1.9%, to $76.11 a barrel. Both Brent and WTI had fallen about 1.4% on Tuesday, hitting their lowest levels in seven weeks.
The escalation in Middle Eastern tensions was triggered by the news of Hamas leader Ismail Haniyeh’s assassination in Iran early Wednesday morning, as confirmed by the Palestinian militant group. This followed an Israeli government claim on Tuesday of killing Hezbollah’s senior commander in Beirut in retaliation for a cross-border rocket attack on Israel the previous Saturday.
These developments occurred despite diplomatic efforts by U.S. and UN officials to prevent a major escalation in the region. Additionally, the United States conducted a strike in Iraq, contributing to the ongoing conflict.
IG analyst Tony Sycamore commented that these events have increased the likelihood of further escalation in the Middle East. He also noted that after three consecutive weeks of declines, speculative accounts in crude oil have significantly reduced their long positions, creating conditions favourable for a rebound.
Despite the rebound, Brent and WTI are on track for their largest monthly loss since October 2023 due to ongoing concerns about China’s demand outlook and expectations that OPEC+ will maintain their current production cuts, beginning to unwind some of these cuts from October. The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will hold an online joint ministerial monitoring committee meeting on Thursday at 1000 GMT.
The assassination of a key Hamas leader has sparked a temporary surge in oil prices, but market dynamics, particularly those related to Chinese demand and OPEC+ production decisions, continue to play a significant role in shaping the overall outlook.
Union Jack Oil plc (LON:UJO) is an onshore oil and gas exploration company with a focus on drilling, development and investment opportunities in the United Kingdom hydrocarbon sector.
