Outbreak of violence between Israel and Hamas drives oil prices upwards

The surprise attack by the Palestinian militant organisation Hamas on Israel, which started on Saturday, has led to uncertainty in the oil markets, which saw prices jump due to concerns that the conflict could cause disruptions to output from the Middle East.

The price for Brent crude increased by $4 between Friday and Sunday, reaching $88.43 a barrel, although prices decreased to $86.90 by Monday morning.

Although Israel and Palestine do not produce oil, the Middle East provides close to a third of global supply. The scale of the attack, Israel’s largest loss of life since the 1973 Yom Kippur War, has also raised concerns that the conflict could draw in other countries in the region.

Hamas has also indicated that it had backing from Iran, the world’s seventh largest oil producer.

Should the conflict spread throughout the region it could imperil the passage of tankers through the Strait of Hormuz, through which about a fifth of the global oil supply passes.