Oil Prices Soar by $4 Amid Middle East Crisis

Oil prices increased by more than $4 per barrel in early Asian trade on Oct 9, as dramatic military clashes between Israeli and Hamas forces over the weekend heightened political uncertainty throughout the Middle East.

Brent crude was up $4.18, or 4.94 percent, to $88.76 per barrel by 0120 GMT, while West Texas Intermediate crude was up $4.23, or 5.11 percent, to $87.02 per barrel.

The rise in oil prices reversed last week's downward trend - the largest weekly drop since March - in which Brent fell about 11% and WTI fell more than 8% due to concerns about high interest rates and their impact on global demand.

Palestinian Islamist group Hamas on Oct 7 launched the largest military assault on Israel in decades, killing hundreds of Israelis and triggering a wave of retaliatory Israeli air strikes on Gaza that continued through Sunday.

"Increasing geopolitical risk in the Middle East should support oil prices ... higher volatility can be expected" analysts from ANZ Bank said in a client note.

The outbreak of violence threatens to derail US efforts to mediate a reconciliation between Saudi Arabia and Israel, in which the kingdom would normalise relations with Israel in exchange for a defence agreement between Washington and Riyadh.

According to reports, Saudi officials told the White House on Oct 6 that they were willing to increase output next year as part of the proposed Israel deal.

After months of supply cuts from key producers Saudi Arabia and Russia, an increase in Saudi output would have helped to relieve supply tightness.