Oil prices rise on fears of wider Middle East conflict following Golan Heights rocket attack

By Yuka Obayashi

TOKYO (Reuters) – Oil prices rose on Monday, paring last week’s losses, on fears of an escalating conflict in the Middle East following a rocket attack on the Israeli-occupied Golan Heights, which Israel and the United States attributed it to the Lebanese armed group Hezbollah. .

Brent crude futures gained 20 cents, or 0.3%, to $81.33 a barrel by 0010 GMT. West Texas Intermediate (WTI) crude futures rose 9 cents, or 0.1%, to $77.25 a barrel.

Last week, Brent lost 1.8%, while WTI fell 3.7%, due to falling Chinese demand and hopes of a ceasefire agreement in Gaza.

On Sunday, Israel’s security cabinet authorized Prime Minister Benjamin Netanyahu’s government to decide on the “manner and timing” of a response to Saturday’s rocket attack on the Golan Heights, which killed 12 teenagers and children.

Iran-backed Hezbollah has denied responsibility for the attack, the deadliest in Israel or Israeli-annexed territory since the October 7 attack by the Palestinian militant group Hamas triggered the war in Gaza. This conflict has spread across several fronts and risks turning into a wider regional conflict.

Israel has vowed retaliation against Hezbollah in Lebanon, and Israeli jets struck targets in southern Lebanon on Sunday.

“Concerns about escalating tensions in the Middle East led to new purchases, but gains were limited by persistent concerns about weakening demand in China,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.

In recent weeks, hopes for a ceasefire in Gaza have been gaining momentum.

But Israel wants changes to a plan for a truce in Gaza and the release of hostages by Hamas, complicating an agreement to halt nine months of fighting that has devastated the enclave, according to a Western official, a Palestinian source and two Egyptian sources.

On the demand side, data released earlier this month showing that China’s total fuel oil imports fell 11% in the first half of 2024 raised concerns about the broader demand outlook in China, the world’s biggest oil importer. gross.

Meanwhile, U.S. energy companies last week added oil and natural gas rigs for the second week in a row, increasing the monthly count to the most since November 2022, energy services firm Baker Hughes said in its closely watched report. on Friday.

(Reporting by Yuka Obayashi; Editing by Sonali Paul)