Oil prices gain as Middle East tension poses supply risks

By Sibel Morrow

Oil prices increased on Tuesday with escalating tension in the Middle East following the deaths of three US soldiers in Jordan, while economic concerns in China limited the price upticks.

The international benchmark crude Brent traded at $82.01 per barrel at 12.25 a.m. local time (0925 GMT), a 0.83% increase from the closing price of $81.33 a barrel in the previous trading session on Monday.

The American benchmark, West Texas Intermediate (WTI), traded at the same time at $77 per barrel, up 0.28% from Monday’s close of $76.78 per barrel.

Prices started Tuesday on a bearish note as investors cashed out on higher prices on Monday.

Both benchmarks increased more than $1 a barrel on Monday over protracted tension in the Middle East after the deaths of three US service members while many were wounded during an unmanned aerial drone attack on US forces stationed in northeast Jordan over the weekend.

A group calling itself the Islamic Resistance in Iraq claimed responsibility for the attack.

The US holds Iran responsible as they "fund, train and support and equip these militias" that operate in Iraq and Syria, a Pentagon spokesperson said Monday.

Secretary of State Antony Blinken, in the meantime, raised the possibility of a prolonged and multi-staged response to the attack that killed the three American soldiers in Jordan.

Expectations of the US economy making a "soft landing" given that the Fed is unlikely to make an interest rate hike at its next meeting on Wednesday and a projected demand boost continues to fuel oil price gains.

However, concerns about a post-COVID economic rebound in the world's top oil importer are growing and suppressing price surges as a result of the financial difficulties faced by China's financially troubled construction and real estate giant, Evergrande, which was ordered to liquidate.