Oil prices increased by over 1% on Tuesday following reports that the Israeli military launched an assault on Hamas leadership in Doha, Qatar, marking a broader extension of its longstanding military operations in the Middle East.
Qatar, a significant energy exporter globally, denounced the attack as “cowardly” and a breach of international law.
Brent crude futures climbed 74 cents, or 1.1%, reaching $66.76 per barrel by 11:39 a.m. ET, peaking earlier at $67.38. U.S. West Texas Intermediate crude also rose 74 cents, or 1.2%, to $63 per barrel.
This attack on Qatar followed an Israeli announcement about its intentions to destroy Gaza City. Experts regarded this as a significant escalation of Israel’s military actions in the Middle East.
“The escalation might lead more Arab nations to adopt a firmer stance against Israel,” noted StoneX analyst Alex Hodes.
Countries including Iran, the UAE, Turkey, and Saudi Arabia condemned the attack on Qatar.
Israel has previously executed strikes on Iran, Syria, Lebanon, and Yemen as part of its nearly two-year campaign in Palestine, which local authorities report has resulted in over 64,000 deaths.
Israel claims its operations in Gaza are acts of self-defense following an October 7, 2023, Hamas attack. Israeli reports state that Hamas killed 1,200 individuals and captured 251 hostages in Israel on that day.
The assault on Qatar represents a significant hurdle to recent diplomatic efforts to address the Palestinian conflict, according to Rystad Energy analysts.
“The already fragile negotiation path now seems obstructed, reducing hopes for a near-term conflict resolution,” commented Jorge Leon, Rystad’s head of geopolitical analysis.
Prior to the attack on Qatar, oil prices were already on an upward trend, boosted by OPEC+’s smaller-than-expected oil output increase, expectations of continued oil stockpiling by China, and fears of possible new sanctions against Russia.
Traders are also eyeing the upcoming U.S. weekly inventory reports due Wednesday, along with monthly reports from OPEC and the International Energy Agency on Thursday, as noted by Ritterbusch and Associates.
Additionally, there’s anticipation that the U.S. Federal Reserve, meeting next week, will cut interest rates. Lower rates can decrease consumer borrowing costs, potentially spurring economic growth and increasing oil demand.
Revised U.S. employment data for the year ending in March was unexpectedly lower on Tuesday, leading traders to anticipate the Federal Reserve will reduce short-term rates next week and continue to do so throughout the year to support the labor market.
