Oil prices increased on Wednesday with escalating tension in the Middle East and positive economic indicators in the US, the world’s biggest oil consumer, which offset news stories that Hezbollah is seeking a cease-fire with Israel.
International benchmark Brent crude rose by 0.70% to $77.72 per barrel at 10.48 a.m. local time (0748 GMT), up from the previous session’s close of $77.18.
US benchmark West Texas Intermediate (WTI) increased by 0.56% to $73.98 per barrel after closing at $73.57 in the prior session.
Ongoing conflicts in the Middle East, where most of the world’s hydrocarbon resources are located, support price increase.
The fight between the Israeli army and Hezbollah has been ongoing since Oct. 2023.
The Lebanese Hezbollah group announced Wednesday it had repelled two attempted incursions by Israeli forces into southern Lebanon with artillery and rocket fire, resulting in injuries among Israeli soldiers. A second statement from the group detailed a similar confrontation in the town of Blida.
Despite warnings from international observers about the growing risk of a regional war, Israel expanded the conflict on Oct. 1, initiating a ground invasion into southern Lebanon as it maintains its devastating offensive against Hezbollah and Gaza.
Oil prices fell by more than 4% on Tuesday following news flow that Hezbollah wanted a cease-fire with Israel, though some question the timing of the call for a cease-fire.
The US State Department spokesman Matthew Miller reacted Tuesday to the cease-fire efforts, saying, ‘Where have they been for a year? For a year, the world has been calling on Hezbollah to stop the attacks across the border into Israel.’
Positive economic developments in the US amid steady economic growth and low unemployment also aided the rise in oil prices.
While optimism continues in the US that inflation will be reduced to the targeted level before the economy goes into recession, experts are awaiting the inflation data scheduled for Thursday for further clues about economic activity.
Experts noted that the upcoming inflation data may give signals about whether the US economy will make a soft landing. In addition, the Federal Open Market Committee (FOMC) meeting minutes are expected to give possible cues about future policies.
Analyst expect that the US Federal Reserve (Fed) will cut interest rates by 25 basis points each in the two Fed meetings until the end of the year.
