- Oil spikes as hospital blast amplifies Middle East tensions

Oil prices rose by nearly 2% on Wednesday due to escalating tension in the Middle East following a blast at a Gaza hospital that resulted in hundreds of casualties. This raised concerns about potential disruptions to oil supply from the region. Brent crude futures increased by $1.55, or 1.7%, to reach $91.45 a barrel, while West Texas Intermediate crude (WTI) futures rose by $1.66, or 1.9%, to $88.32 a barrel. Both benchmarks reached their highest levels in two weeks earlier in the session. The market factored in risk premiums after the blast in Gaza City, which led to blame being placed on Israeli and Palestinian officials. As a result, Jordan cancelled a summit with U.S. President Joe Biden and Egyptian and Palestinian leaders. Biden arrived in Israel to consult on the escalating Gaza war. The fear of conflict spreading and the potential involvement of Iran pushed oil prices higher. Other factors supporting oil prices include a larger-than-expected decrease in U.S. crude stocks and China’s faster-than-expected economic growth in the third quarter. However, caution remains regarding China’s real estate sector, and the economic recovery is still in its early stages. Additionally, U.S. retail sales exceeded expectations in September, leading to expectations of another interest rate hike by the Federal Reserve. Finally, Venezuela’s government and political opposition agreed to electoral guarantees for the 2024 presidential elections, which could potentially lead to U.S. sanctions relief and increased oil supplies.