Middle East benchmarks strengthened last month. Credit: Terry McGraw from Pixabay.

Global crude oil prices have soared by more than $3 a barrel as concerns grow over disruptions to supplies due to attacks by Palestinian militant group Hamas on Israel, reported Reuters.

Brent crude surged by $3.10 to $87.68 a barrel by 0400 GMT and US West Texas Intermediate crude increased by $3.26 to settle at $86.05 a barrel.

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The jump in oil prices has reversed the downtrend seen last week, the largest weekly fall since March this year, amid growing concerns about high interest rates and their effect on demand globally.

On 7 October 2023, Palestinian militant group Hamas launched the ‘largest military assault’ in decades on Israel, killing hundreds of people. This triggered retaliatory strikes by Israel on Gaza that also killed hundreds of people.

In a client note, ANZ Bank analysts were quoted by the news agency as saying: “Increasing geopolitical risk in the Middle East should support oil prices… higher volatility can be expected.”

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Energy analyst Saul Kavonic said: “The risk premium on oil is rising due to the prospect of a wider conflagration that could spread to nearby major oil producing nations such as Iran and Saudi Arabia.”

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The conflict in the Middle East region is anticipated to pose a threat to US efforts to mediate a reconciliation between Saudi Arabia and Israel, reported Reuters.

Last week, Saudi Arabia reportedly indicated its intention to the US to raise crude oil output in 2024, in case crude oil prices are too high.

The move comes as Saudi Arabia looks to gain support in US Congress for a deal to normalise relations with Israel in exchange for a defence agreement between Saudi Arabia and the US, reported the Wall Street Journal, citing Saudi and US officials.