Oil prices add 2% as tensions escalate in the Middle East‎

Oil prices rose on Wednesday as tensions rose in the Middle East after hundreds were killed in a hospital explosion in Gaza, raising concerns about disruptions to oil supplies from the region.

By 0225 GMT, Brent crude futures increased $2.07, or 2.3 percent, to $91.97 per barrel. US West Texas Intermediate crude futures also rose $2.26, or 2.6 percent, to $88.92 per barrel.

According to Reuters, markets took into account the risks after about 500 Palestinians were killed in a hospital explosion in Gaza City on Tuesday, for which Israeli and Palestinian officials exchanged blame.

Then Jordan canceled a summit it was scheduled to host with US President Joe Biden and Egyptian President Abdel Fattah El-Sisi and Palestinian President Mahmoud Abbas.

Vivek Dhar, an analyst at the Commonwealth Bank of Australia, said in a note to clients, “Canceling the summit between Biden and the Arab leaders reduces the chances of reaching a diplomatic solution to the conflict between Hamas and Israel.”

Markets are also concerned about Israel launching a ground attack on Gaza.

Biden is scheduled to visit Israel on Wednesday to show support for it in its war with Hamas.

Oil prices also received support from a decline in US crude inventories by about 4.4 million barrels in the week ending October 13, according to market sources, citing American Petroleum Institute figures on Tuesday.

This was a sharp decline compared to analysts’ expectations of a decline of only 300 thousand barrels. Official data is scheduled to be issued later on Wednesday.

On the demand side, official data showed on Wednesday that the Chinese economy grew faster than expected in the third quarter, indicating that the recent recovery may be enough for Beijing to achieve its growth goal for the full year.

Meanwhile, US retail sales rose more than expected in September, raising expectations that the Federal Reserve will raise interest rates again by the end of the year. Raising interest rates to reduce inflation could slow economic growth and reduce demand for oil.