Oil prices rise on growing tensions in Middle East
London, UK – Oil prices increased on Tuesday, with data showing strong economic activity in the US and escalated geopolitical tensions in the Middle East, where the majority of global oil resources are located.
International benchmark Brent crude traded at $88.40 per barrel at 11.28 a.m. local time (0828 GMT), a 1.1% rise from the closing price of $87.42 per barrel in the previous trading session.
The US benchmark West Texas Intermediate (WTI) traded at $84.77 per barrel at the same time, a 1.3% increase from the previous session that closed at $83.71 per barrel.
Oil prices spiked up after data released on Monday showed that the manufacturing industry in the US expanded for the first time after a 16-month contraction.
According to the US Institute of Supply Management's (ISM) Manufacturing Purchasing Managers Index (PMI), the manufacturing sector in the world's biggest oil-consuming country exceeded market expectations with a value of 50.3 in March, signaling strong oil demand.
Major central banks worldwide, in preparation for interest rate cuts, also supported higher oil prices. Experts forecast that interest rate cuts will boost economic activity and demand in all sectors, including the oil market.
Meanwhile, Israel's sustained attacks on the Gaza Strip, which are carried out in defiance of a UN Security Council resolution calling for a cease-fire, are exacerbating tensions in the Middle East.
Furthermore, a missile strike targeting the Iranian Consulate in the Syrian capital, Damascus, resulting in the killing of a top commander of Iran’s Islamic Revolutionary Guard Corps (IRGC) and six other officers, heightened tensions in the region that hosts busy energy supply routes.
Early Monday, General Mohammed Reza Zahedi, a senior commander of Iran’s Islamic Revolutionary Guard Corps’ (IRGC) Quds Force in Syria and Lebanon, was reportedly killed in a strike that destroyed the Iranian consulate building next to the Iranian Embassy, according to the staterun IRNA news agency.