Crude oil prices edge higher as tensions rise in Middle East, Brent crosses $77/barrel

Crude oil prices edged higher on Tuesday, August 6, in the backdrop of the escalating tensions in the Middle East. The market is fearing an outbreak of a regional war as Iran has warned of "retaliatory action" against Israel.

Global crude benchmark opened the day's trade at $77.26 per barrel, as against the last closing price of $76.3. It peaked to a day's high of $77.8 a barrel, which was 1.2% higher than the previous session's close.

The U.S. West Texas Intermediate (WTI) crude opened at $74.03 per barrel, higher as compared to the last closing price of $72.95. As trading progressed, it touched a high of $74.56, up 2.2% as against the previous session's close.

By 0700 hours GMT, crude oil futures lost much of the day's gains, but were still trading in the green. Brent was priced at $76.64 a barrel, up 0.45% and WTI was trading 0.69% higher at $73.44 per barrel.

Middle East on the edge

The Middle East, also referred to as West Asia, is crucial for global east-west trade and supply of crude oil to markets worldwide. The region is also the biggest producer of crude oil.

While the region has remained tense since the Israeli offensive launched on Gaza nine months ago, the tensions have escalated following the assassination of Ismail Haniyeh, the chief of the political wing of Palestinian militant group Hamas.

Haniyeh was killed in an alleged Israeli airstrike while he was in Tehran, the Iranian capital, on an official visit.

Iran's Supreme Leader Ayatollah Ali Khamenei has promised that his country would avenge the death of Haniyeh. “We consider it our duty to avenge his blood in this bitter and difficult incident that happened in the territory of the Islamic Republic,” he said last week.

An outbreak of a direct military conflict between Iran and Israel could disrupt the flow of crude oil in the international market, analysts have warned.