LONDON: Oil prices jumped about four per cent on Tuesday following reports Iran was preparing to launch a missile attack on Israel.

Brent futures were up $2.50, or 3.5pc, to $74.20 a barrel by 11:50 a.m. EDT (1550 GMT), while US West Texas Intermediate (WTI) crude rose $2.54, or 3.7pc, to $70.71.

Israel’s elite units launched limited ground raids into Lebanon, as Hezbollah, an Iran-backed group in Lebanon, fired missiles at Tel Aviv, with the US warning it had indications Iran may be preparing to enter the fray with a ballistic missile attack on Israel.

The tit-for-tat escalation following weeks of intense Israeli airstrikes on Lebanon raised concerns of a broader Middle East conflagration that would suck in both Iran and the US.

“Iran would be making a huge mistake to attack Israel now. Jerusalem will not hesitate to widen its military offensive to hit Iran directly. And Iran’s oil assets are very likely on the target list,” Clay Seigle, an independent political risk strategist, said in an email.

An Israeli attack on Iranian oil production or export facilities could cause a material disruption, potentially more than a million barrels per day, Seigle said.

Before news of a possible missile attack from Iran, the oil market was trading down near a two-week low as the outlook for increased supplies and tepid global demand growth outweighed fears over an escalating Middle East conflict and its impact on crude exports from the region.

A panel of ministers from the Opec+ producer group meets on Oct 2 to review the market, with no policy changes expected.­

Published in Dawn, October 2nd, 2024