Brent crude rose above $86 on Thursday as fears of an all-out war between Israel and Lebanon took center stage, with Iranian-backed militias in Iraq vowing to attack U.S. interests in the Middle East if Israel launches a full-scale campaign against Hezbollah in southern Lebanon.
Overnight, an Israeli attack in southern Lebanon left more than 20 people injured after hitting a residential building in the center of the city of Nabatieh, according to Lebanese news agencies, which reported that there were no fatalities and no injuries. They were critical.
German Foreign Minister Annalena Baerbock on Wednesday urged restraint, warning that any “miscalculation” could trigger an all-out war between Israel and Hezbollah. She said that “with every rocket crossing the Blue Line between Lebanon and Israel, the danger grows that a miscalculation could spark a hot war,” The National reported. Earlier this week, the leader of Asaib Ahl al-Haq (League of the Righteous), a powerful Iranian-backed militia in Iraq and on the US list of foreign terrorist organizations, said on public television that American interests in the region will be targeted if Israel attacks.
Last week, Israeli Prime Minister Benjamin Netanyahu said that with operations in Gaza gradually winding down, the focus will now shift to Lebanon and Hezbollah, CNN reported.
Markets are concerned that a war between Israel and Lebanon could quickly turn into a significantly escalated proxy war on multiple fronts with Iran, potentially threatening future oil supplies.
These concerns intensified on Thursday after disappointing US inventory data the previous day dampened demand optimism. On Wednesday, the U.S. Energy Information Administration (EIA) reported a 3.6 million barrel increase in oil inventories, versus expectations for a 2.9 million barrel increase. barrels of analysts surveyed by Reuters. Gasoline inventories also registered a much larger increase than analysts expected.
At 11:08 a.m. ET on Thursday, Brent crude oil was trading up 1.01% at $86.11, and West Texas Intermediate (WTI) was trading up 0.99% at $81.70.
By Tom Kool for Oilprice.com
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