Brent climbs 5.5% amid Middle East tensions

International benchmark rose 5.5% on Monday away from five-week lows amid growing geopolitical tensions in the Middle East after the heavy military attack launched by the Islamist Hamas group on Israel during the weekend.

Brent Price 

Brent rose 5.5% to $88.95 a barrel, from the opening of $86.42. 

Brent rose 0.25% on Friday, the first profit in three sessions away from August 29 lows at $83.49 a barrel. 

Global oil prices lost 8.5% in average last week, the second weekly loss in a row, and the steepest since March.

Geopolitical Tensions 

Tensions flared in the Middle East as Hamas launched a surprise attack on Israel, resulting in one of the bloodiest days in the country's history.

Hamas launched thousands of rockets into Israeli territory, stormed many towns and gathered many hostages, with Israel retaliating with quick devastating attacks on the Gaza strip.

The raid resulted in the death of nearly 1100 person so far from both sides, with the US announcing plans to send an aircraft carrier and 5000 soldiers to the region.

Oil Supplies

Both sides of the conflict aren't serious producers of the oil market as Israel only owns two oil refineries producing 300 thousand bpd.

Thus the current war isn't a direct threat to oil supplies, however it could develop and drag the US and Iran inside it, in turn threatening stability of supplies.

Iran, which was accused of supporting the raid, could potentially attempt to hurt crude supplies going through the Persian Gulf in retaliation against US-backed Gulf states.

Estimates

Commonwealth Bank's analysts said that for this conflict to have a sustained impact on the oil market, supplies must be affected.

Such a scenario will only materialize if Iran got involved directly into the conflict.