Investing.com - Oil prices experienced a significant leap of over $3 a barrel in early Asian trade on Monday. This surge comes in the wake of intensified military confrontations between Israeli forces and Hamas over the past weekend, leading to heightened political uncertainty across the Middle East.
Brent crude saw an increase of $3.34, or 3.95%, reaching $87.92 a barrel by 2320 GMT. Concurrently, U.S. West Texas Intermediate crude rose to $86.23 a barrel, marking an increase of $3.44, or 4.16%.
Over the weekend, the Islamist group Hamas initiated the largest military offensive against Israel in decades, resulting in hundreds of Israeli casualties. In retaliation, Israel launched a series of airstrikes on Gaza, which persisted throughout Sunday.
This sudden eruption of hostilities jeopardizes U.S. attempts to foster a reconciliation between Saudi Arabia and Israel. The proposed plan involves Saudi Arabia normalizing ties with Israel in exchange for a defense agreement between Washington and Riyadh. A successful normalization of Saudi-Israeli relations could potentially halt recent efforts to ease tensions between Saudi Arabia and Iran.
Analysts from ANZ Bank noted in a client note that the "increasing geopolitical risk in the Middle East should support oil prices... higher volatility can be expected."
The attacks have been condemned by Western nations but have received open praise from Iran and Hezbollah, Iran's allies in Lebanon. Market focus has now shifted to the possibility of Iranian involvement in the attacks, a claim already made by Israeli authorities.