Brent Crude oil prices briefly fell below $80 a barrel but quickly rebounded as Middle East tensions escalated. Early Wednesday, prices surged by 2.5% following the assassination of Hamas leader Ismail Haniyeh in Iran.
In European morning trading, Brent Crude was up 2.51% at $80.50 per barrel. Meanwhile, the U.S. benchmark, WTI Crude, increased by 2.62% to $76.70 per barrel. On Tuesday, Brent had dipped below $80 due to ongoing concerns about weakening oil demand in China.
The recovery in oil prices came as reports emerged of Haniyeh’s death. This incident followed Israel’s announcement that it had killed senior Hezbollah commander Fuad Shukr in an airstrike on Beirut, Lebanon. The strike was retaliation for a Hezbollah attack on the Golan Heights over the weekend.
Iran’s Ayatollah Ali Khamenei condemned the assassination, declaring that the Israeli regime’s actions would lead to severe repercussions. He stated, “The criminal, terrorist Zionist regime has martyred our dear guest and caused our grief, but it has also prepared the ground for a severe punishment.” Khamenei vowed that Iran would seek revenge for the attack on its soil.
The market’s initial reaction reflects growing fears of a potential direct conflict between Israel and Iran. This geopolitical uncertainty has overshadowed concerns about lower-than-expected oil demand in China.
Details about the killing are still emerging, but ING commodities strategists Warren Patterson and Ewa Manthey noted that the market is adjusting to a higher risk premium for oil.