Oil Prices Surge as Middle East Tensions Escalate

Oil prices surged by approximately 4% following Iran’s missile attack on Israel, a retaliation for Israel's offensive against Hezbollah in Lebanon. Market analysts predict potential disruptions in oil supply, leading to volatility. This comes amid concerns over OPEC+ production policies and possible recovery in Libyan oil output.

Oil prices surged nearly 4% on Tuesday after Iran launched ballistic missiles at Israel in response to the latter's actions in Lebanon. The attack prompted alarms across Israel, with explosions heard in Jerusalem and the Jordan River valley as residents sought refuge in bomb shelters.

Brent futures rose $2.51, or 3.5%, to $74.21 a barrel by 1:52 p.m. EDT (1752 GMT), while U.S. West Texas Intermediate crude increased by $2.41, or 3.5%, to $70.58. Independent political risk strategist Clay Seigle warned that Israel might expand its military operations to target Iran's oil assets, potentially disrupting over a million barrels per day of Iranian oil production or exports.

Meanwhile, the Houthis in Yemen, backed by Iran, claimed responsibility for attacks on vessels near Hodeidah. This escalation feeds into wider fears of supply impacts, with analysts like Tamas Varga from PVM cautioning about further volatility in the oil markets. With the OPEC+ group set to review market conditions and a potential rebound in Libyan oil output, the landscape remains uncertain.

(With inputs from agencies.)