Oil up amid growing geopolitical conflicts in Middle East, strong US demand

By Duygu Alhan

Oil prices increased on Thursday amid growing tension in the Middle East following the assassination of Ismail Haniyeh, the head of the Palestinian Hamas group's political bureau, and positive demand outlook in the US, supported by inventory data from the Energy Information Administration (EIA).

International benchmark Brent crude traded at $81.44 per barrel at 10.13 a.m. local time (0713 GMT), a rise of 0.74% from the closing price of $80.84 per barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $78.33 per barrel at the same time, a 0.53% increase from the previous session that closed at $77.91 per barrel.

Haniyeh was killed in an Israeli airstrike on his Tehran apartment the day after attending Iranian President Masoud Pezeshkian's inauguration, according to announcements made by Iran and Hamas on Wednesday morning.

Though Israel has remained silent about Haniyeh's death, Prime Minister Benjamin Netanyahu has hinted at Tel Aviv's involvement in his assassination.

Escalating geopolitical tensions in the regoin, home to a vast majority of global oil reserves, despite cease-fire negotiations, supported upward price movements by increasing supply risk in the markets.

Meanwhile, data indicating a drop in crude stocks in the US, the world's largest oil-consuming country, lent support to crude oil prices by suggesting that oil demand was increasing.

According to data released by the EIA late Wednesday, US commercial crude oil inventories decreased by 3.4 million barrels to 433 million barrels during the week ending July 26.

The drop in inventory was well above the market prediction of a 1.6 million barrels fall.

However, the rise of the US dollar against other currencies limited further price rises. Strong dollar ramped up prices for non-US currency holders and discouraged investors.

The US dollar index rose by 0.09% to 104.18 at 9.58 a.m. local time (0658 GMT), compared to the previous trading session.