Oil prices surged by approximately 2% early Wednesday following a devastating blast at a hospital in Gaza City, resulting in the loss of hundreds of lives.
Both Israel and Hamas have accused each other of responsibility for the explosion, which Palestinian officials claim claimed the lives of at least 500 people. This tragic event prompted President Joe Biden to postpone his scheduled trip to Jordan in order to attend a regional summit on Gaza. President Biden, en route to Israel, has confirmed that his national security team is currently investigating the explosion. The President arrived in Israel in the early hours of Wednesday.
The oil market is highly susceptible to disruption during Middle East conflicts due to the intricate network of alliances among producing countries in the region. Although Israel and Jordan possess limited oil reserves, there is concern that the war could escalate to involve Iran, a major exporter of millions of barrels per day. Moreover, countries like Saudi Arabia, located in the vicinity, are renowned for their significant crude production.
President Biden’s primary objective during his visit is to prevent further escalation of the conflict in the region, while also reaffirming his unwavering support for Israel.
Currently, West Texas Intermediate (the U.S. standard) is trading 2.3% higher at $88.64 per barrel. Similarly, Brent crude (the international standard) has seen a 2% increase, reaching $91.72 per barrel. Both futures contracts have recorded over 6% growth over the past week.